<PAGE>

                                                                            2002
--------------------------------------------------------------------------------
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                      ------------------------------------

                                   Form 10-K
(Mark One)
     [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

     [ ]         FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002 OR
                  TRANSITION REPORT PURSUANT TO SECTION 13 OR
                  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
             For the transition period from           to

                           Commission File No. 1-2438

                               ISPAT INLAND INC.
             (Exact name of registrant as specified in its charter)

<Table>
<S>                                            <C>
                   DELAWARE                                      36-1262880
           (State of Incorporation)                 (I.R.S. Employer Identification No.)

  3210 WATLING STREET, EAST CHICAGO, INDIANA                       46312
   (Address of principal executive offices)                      (Zip Code)
</Table>

     Registrant's telephone number, including area code: (219) 399-1200

     Registrant meets the conditions set forth in general instruction I(1)(a)
and (b) of Form 10-K and is therefore filing this form with the reduced
disclosure format.

     Securities registered pursuant to Section 12(b) of the Act:

<Table>
<Caption>
TITLE OF EACH CLASS                              NAME OF EACH EXCHANGE ON WHICH REGISTERED
-------------------                              -----------------------------------------
<S>                                            <C>
First Mortgage Bonds:
  Series R, 7.90% Due January 15, 2007........         New York Stock Exchange, Inc.
</Table>

     Securities registered pursuant to Section 12(g) of the Act:
                                      None

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.  Yes [X]  No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in any amendment to this Form 10-K.  [X]

     Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).  Yes [ ]  No [X]

     The number of shares of Common Stock ($.01 par value) of the registrant
outstanding as of March 28, 2003 was 100, all of which shares were owned by
Ispat Inland Holdings, Inc. Consequently, the aggregate market value of voting
and non-voting Common Stock of the registrant held by non-affiliates is $0.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                                     PART I

ITEM 1.  BUSINESS.

     Ispat Inland Inc. together with its subsidiaries (the "Company"), a
Delaware corporation and an indirect wholly owned subsidiary of Ispat
International N.V. ("Ispat"), is an integrated domestic steel company. The
Company produces and sells a wide range of steels, of which approximately 99%
consists of carbon and high-strength low-alloy steel grades. It is also a
participant in an iron ore production joint venture and certain steel-finishing
joint ventures.

     The Company has a single business segment, which comprises the operating
companies and divisions involved in the manufacturing of basic steel products
and in related raw materials operations.

     On July 16, 1998, Ispat acquired Inland Steel Company (the "Predecessor
Company") from Inland Steel Industries, Inc. ("Industries") in accordance with
an Agreement and Plan of Merger ("Agreement"), dated as of May 27, 1998, amended
as of July 16, 1998 (the "Acquisition"). The Predecessor Company was renamed
Ispat Inland Inc. on September 1, 1998. Ispat paid $1,143.1 million, plus an
assumption of certain liabilities or obligations, to acquire the Predecessor
Company.

OPERATIONS

     The Company is directly engaged in the production and sale of steel and
related products. Certain Company subsidiaries and affiliates are engaged in the
mining and pelletizing of iron ore and in the operation of a cold-rolling mill
and steel galvanizing lines. All raw steel made by the Company is produced at
its Indiana Harbor Works located in East Chicago, Indiana, which also has
facilities for converting the steel produced into semi-finished and finished
steel.

     The Company has two divisions--the Flat Products division and the Bar
division. The Flat Products division manages the Company's iron ore operations,
conducts its ironmaking operations, and produces the major portion of its raw
steel. This division also manufactures and sells steel sheet, strip and certain
related semi-finished products for the automotive, steel service center,
appliance, office furniture and electrical motor markets. The Bar division
manufactures and sells special quality bars and certain related semi-finished
products to the automotive industry directly as well as through forgers and cold
finishers, and also sells to steel service centers and heavy equipment
manufacturers.

     The Company and Nippon Steel Corporation ("NSC") are in joint ventures that
operate steel-finishing facilities near New Carlisle, Indiana. The total cost of
these two facilities, I/N Tek and I/N Kote, was approximately $1.1 billion. I/N
Tek, owned 60% by a wholly owned subsidiary of the Company and 40% by an
indirect wholly owned subsidiary of NSC, operates a cold-rolling mill. I/N Kote,
owned equally by a wholly owned subsidiary of the Company and by an indirect
wholly owned subsidiary of NSC, operates two galvanizing lines.

RAW STEEL PRODUCTION AND MILL SHIPMENTS

     The following table shows, for the three years indicated, the Company's
production of raw steel and, based upon American Iron and Steel Institute data,
its share by percentage of total domestic raw steel production:

<Table>
<Caption>
                                                                  RAW STEEL PRODUCTION
                                                              ----------------------------
                                                                              % OF U.S.
                                                              (000 TONS*)   STEEL INDUSTRY
                                                              -----------   --------------
<S>                                                           <C>           <C>
2002........................................................     5,691           5.6%**
2001........................................................     5,430           5.5
2000........................................................     5,780           5.2
</Table>

---------------

 * Net tons of 2,000 pounds.

** Based on preliminary data from the American Iron and Steel Institute.

                                        2
<PAGE>

     The annual raw steelmaking capacity of the Company is 6.0 million net tons.
The basic oxygen process accounted for 92% of raw steel production of the
Company for each of 2002 and 2001. The remainder of such production was
accounted for by the electric furnace process.

     The total tonnage of steel mill products shipped by the Company for each of
the five years 1998 through 2002 was 5.7 million tons in 2002; 5.4 million tons
in 2001; 5.6 million tons in 2000; 5.8 million tons in 1999; and 5.2 million
tons in 1998. In 2002 and 2001, sheet, strip and certain related semi-finished
products accounted for 88% and 85%, respectively, of the total tonnage of steel
mill products shipped from the Indiana Harbor Works. Bar and certain related
semi-finished products accounted for 12% in 2002 and 15% in 2001.

     In 2002 and 2001, approximately 93% and 90%, respectively, of the shipments
of the Flat Products division and 85% and 90%, respectively, of the shipments of
the Bar division were to customers in 20 mid-American states. Approximately 74%
and 72%, respectively, of the shipments of the Flat Products division and 75%
and 82%, respectively, of the shipments of the Bar division were to customers in
a five-state area comprised of Illinois, Indiana, Ohio, Michigan and Wisconsin
in 2002 and 2001. Both divisions compete in these geographical areas,
principally on the basis of price, service and quality, with the nation's
largest producers of raw steel as well as with foreign producers and with many
smaller domestic mills.

     The steel market is highly competitive with major integrated producers,
including the Company, facing competition from a variety of sources. Many steel
products compete with alternative materials such as plastics, aluminum,
ceramics, glass and concrete. Domestic steel producers have also been adversely
impacted by imports from foreign steel producers. Imports of steel products
accounted for 25.6% of the domestic market in 2002, up from 24.5% in 2001. The
issue surrounding unfairly traded imports aggravates market conditions, in
particular with respect to foreign government subsidies that are used to offset
operating losses by foreign producers. On March 5, 2002 President Bush
determined to impose tariffs and quotas on a broad range of imported steel. The
three-year tariffs on imported steel of the same types as most of the Company's
products are generally 30%, decreasing to 24% in year two, and 18% in year
three. Although the Company welcomes these Administration actions, there can be
no assurance that the actions will improve the financial condition of the
Company, particularly if the effectiveness of the actions is undermined by the
issuance of broad exclusions from the tariffs and quotas, or by adverse
decisions of the World Trade Organization challenging the restrictions.

     Mini-mills provide significant competition in various product lines.
Mini-mills are relatively efficient, low-cost producers that manufacture steel
principally from scrap in electric furnaces and, at this time, generally have
lower capital, overhead, employment and environmental costs than the integrated
steel producers, including the Company. Mini-mills have been adding capacity and
expanding their product lines in recent years to produce larger structural
products and certain flat rolled products. Thin-slab casting technologies have
allowed mini-mills to enter certain sheet markets traditionally supplied by
integrated producers. Several mini-mills using this advanced technology are in
operation in the United States.

     For the three years indicated, shipments by market classification of steel
mill products produced by the Company at its Indiana Harbor Works are set forth
below. As shown in the table, a substantial portion of shipments by the Flat
Products division was to steel service centers and transportation-related
markets.

<Table>
<Caption>
                                                                   PERCENTAGE OF TOTAL
                                                                TONNAGE OF STEEL SHIPMENTS
                                                              ------------------------------
                                                              2002         2001         2000
                                                              ----         ----         ----
<S>                                                           <C>          <C>          <C>
Steel Service Centers.......................................   35%          33%          34%
Automotive..................................................   33           32           31
Steel Converters/Processors.................................   11           13           14
Appliance...................................................    9           10            9
Industrial, Electrical and Farm Machinery...................    7            7            7
Construction and Contractors' Products......................    1            1            1
Other.......................................................    4            4            4
                                                              ---          ---          ---
                                                              100%         100%         100%
                                                              ===          ===          ===
</Table>

     Some value-added steel processing operations for which the Company does not
have facilities are performed by outside processors, including joint ventures,
prior to shipment of certain products to the

                                        3
<PAGE>

Company's customers. In each of 2002 and 2001, approximately 45% and 44%,
respectively, of the products produced by the Company were processed further
through value-added services such as electrogalvanizing, painting and slitting.

     Approximately 80% of the finished steel shipped to customers during 2002
was transported by truck, with 18% transported by rail, and 2% shipped via barge
or other modes of transportation. A wholly owned truck transport subsidiary of
the Company was responsible for shipment of approximately 26% of the total
tonnage of products transported by truck in 2002.

     Substantially all of the steel mill products produced by the Flat Products
division are marketed through its own selling organization, with offices located
in Chicago, Illinois; Southfield, Michigan; and Nashville, Tennessee.
Substantially all of the steel mill products produced by the Bar division are
marketed through its sales office in East Chicago, Indiana.

     See "Product Classes" below for information relating to the percentage of
consolidated net sales accounted for by certain classes of similar products of
steel manufacturing operations.

RAW MATERIALS

     The Company obtains iron ore pellets primarily from two iron ore
properties, in which the Company or a subsidiary of the Company have an
interest--the Empire Mine in Michigan and the Minorca Mine in Minnesota.

     Effective December 31, 2002, the Company sold part of its interest in the
Empire Partnership to a subsidiary of Cleveland-Cliffs, Inc. thereby reducing
its interest in the Empire Mine from 40% to 21%. The Company will have the
option to sell its remaining interest in the Empire Partnership to a subsidiary
of Cleveland-Cliffs, Inc. at any time after December 31, 2007 at a price defined
in the sales agreement. For twelve years, the Company will purchase from
subsidiaries of Cleveland-Cliffs all of its pellet requirements beyond those
produced by the Minorca Mine. The Company will pay a price for such pellets
substantially equivalent to its historic costs for Empire pellets. In 1997, the
Company sold its interest in the Wabush Mines located in LaBrador and Quebec
Canada to a subsidiary of Cleveland-Cliffs, Inc. The Company may purchase iron
ore from the Wabush Mine from time to time in connection with the preceding
Empire arrangement.

     The following table shows (1) the iron ore pellets available to the Company
as of December 31, 2002 from properties of its subsidiary and through interests
in raw materials ventures; (2) 2002 and 2001 iron ore pellet production or
purchases from such sources; and (3) the percentage of the Company's iron ore
requirements represented by production or purchases from such sources in 2002
and 2001.

<Table>
<Caption>
                                                              IRON ORE TONNAGES IN THOUSANDS
                                                                  (GROSS TONS OF PELLETS)
                                             -----------------------------------------------------------------
                                                                                                   % OF
                                                                          PRODUCTION          REQUIREMENTS(1)
                                               AVAILABLE AS OF         ----------------      -----------------
                                             DECEMBER 31, 2002(2)      2002       2001       2002         2001
                                             --------------------      -----      -----      ----         ----
<S>                                          <C>                       <C>        <C>        <C>          <C>
ISPAT INLAND MINING COMPANY
Minorca (100% owned)--Virginia, MN.........         42,987             2,778      2,772       45           41
IRON ORE VENTURE
Empire (21% owned)--Palmer, MI.............         13,146             2,500      2,558       40           38
                                                    ------             -----      -----       --           --
  Total Iron Ore...........................         56,133             5,278      5,330       85           79
                                                    ======             =====      =====       ==           ==
</Table>

---------------

(1) Requirements in excess of production are purchased or taken from stockpile.

(2) Net interest in proven reserves.

     All of the Company's coal requirements are satisfied from independent
sources. In connection with the commencement of operations of the heat recovery
coke battery in 1998 and the associated energy facility discussed below (which
are not assets of the Company), the Company's coal fired generating station was
idled, thereby eliminating the Company's steam coal requirements.

     The Company's other coal requirements are for the PCI Associates joint
venture, in which a subsidiary of the Company holds a 50% interest. The PCI
facility pulverizes coal for injection into the Company's blast furnaces. During
2002 and 2001, the PCI facility's coal needs were satisfied under short-term
contracts.

                                        4
<PAGE>

     The Company, Sun Coal and Coke Company ("Sun"), and a unit of NIPSCO
Industries ("NIPSCO") have jointly developed a heat recovery coke battery and an
associated energy recovery and flue-gas desulphurization facility, located on
land leased from the Company at its Indiana Harbor Works. Sun designed, built,
financed, and operates the cokemaking portion of the project. A unit of NIPSCO
designed, built, financed, and operates the portion of the project which cleans
the coke plant's flue gas and converts the heat into steam and electricity. Sun,
the NIPSCO unit and other third parties invested approximately $350 million in
the project which commenced operations in the first quarter of 1998. The Company
has committed to take, for approximately 15 years, 1.2 million tons of coke
annually on a take-or-pay basis at prices determined by certain cost factors, as
well as energy produced by the facility, through a tolling arrangement. The
Company satisfied 65% of its 2002 total coke needs and 75% of its 2001 total
coke needs under such arrangement. The Company advanced $30 million during
construction of the project, which is recorded as a deferred asset on the
balance sheet and will be credited against required cash payments during the
second half of the energy tolling arrangement. The remainder of the Company's
coke needs are supplied under short-term contracts through third party
purchases.

     The Company sold all of its limestone and dolomite properties in 1990. The
Company entered into a long-term contract with the buyer of the properties to
purchase, subject to certain exceptions and at prices which approximate market,
the full amount of the annual limestone needs of the Company through 2002. The
Company anticipates that, given the expiration of this arrangement, it will
readily secure its limestone needs from this or other sources.

     Approximately 32% and 57% of the iron ore pellets and all of the limestone
received by the Company at its Indiana Harbor Works were transported by two of
the Company's three formerly owned ore carriers in 2002 and 2001, respectively
(the third carrier remains in reserve status). The Company's previously leased
ore carrier was returned to the lessor in March 1999. The Company's three
formerly owned ore carriers were sold to a third party during 1998. These ore
carriers are managed by the new owner, but their shipping services are retained
by the Company under a time-charter. Agreements have been made for the
transportation on the Great Lakes of the remainder of the Company's iron ore
pellet requirements.

     Approximately 49% and 51% of the Company's coke requirements were received
by conveyor belt from the heat recovery coke battery discussed above in 2002 and
in 2001, respectively. Of the remainder, in 2002, approximately 31% was received
in the Company's hopper cars, 10% in independent carrier-owned hopper cars, 57%
in independent carrier-owned barges, and 2% by truck. All of the Company's coal
requirements were received in independent carrier-owned hopper cars.

     See "Energy" below for further information relating to the use of coal in
the operations of the Company.

PRODUCT CLASSES

     The following table sets forth the percentage of consolidated net sales,
for the three years indicated, contributed by each class of similar products of
the Company that accounted for 10% or more of consolidated net sales in such
time period. The data includes sales to affiliates of the Company.

<Table>
<Caption>
                                                              2002   2001   2000
                                                              ----   ----   ----
<S>                                                           <C>    <C>    <C>
Sheet and Strip.............................................   87%    83%    82%
Bar.........................................................   13     17     18
                                                              ---    ---    ---
                                                              100%   100%   100%
                                                              ===    ===    ===
</Table>

     Sales to Ryerson Tull, Inc. approximated 9% and 10% of consolidated net
sales during 2002 and 2001, respectively. No other customer, except I/N Kote,
accounted for more than 10% of the consolidated net sales of the Company during
the noted periods.

CAPITAL EXPENDITURES AND INVESTMENTS IN JOINT VENTURES

     In recent years, the Company and its subsidiaries have made substantial
capital expenditures, principally at the Indiana Harbor Works, to improve
quality and reduce costs, and for pollution control. Additions by the Company
and its subsidiaries to property, plant and equipment, together with retirements
and adjustments, for

                                        5
<PAGE>

the five years ended December 31, 2002, are set forth below. Net capital
additions during such period aggregated $230.9 million.

<Table>
<Caption>
                                                       RETIREMENTS                 NET CAPITAL
                                           ADDITIONS    OR SALES     ADJUSTMENTS    ADDITIONS
                                           ---------   -----------   -----------   -----------
                                                         (DOLLARS IN MILLIONS)
<S>                                        <C>         <C>           <C>           <C>
2002.....................................    $52.4        $49.0(2)      $ --          $ 3.4
2001.....................................    $28.6        $ 1.2         $0.1          $27.5
2000.....................................    $83.0        $ 2.0         $ --          $81.0
1999.....................................    $55.1        $ 1.3         $ --          $53.8(1)
1998.....................................    $65.4        $ 3.1         $2.9          $65.2(1)
</Table>

---------------

(1) 1999 and 1998 results do not reflect the revaluation of property, plant and
    equipment performed as a result of the acquisition of the Company on July
    16, 1998.

(2) 2002 includes the impairment charge of $44.3 (gross asset value) related to
    the 2A Bloomer and 21" Rolling Mill assets and the impairment charge of $4.7
    (gross asset value) related to the flux equipment at the Empire Mine.

     In July 1987, a wholly owned subsidiary of the Company formed a
partnership, I/N Tek, with an indirect wholly owned subsidiary of NSC to
construct, own, finance and operate a cold-rolling facility with an annual
capacity of 1,700,000 tons, of which approximately 40% is cold-rolled substrate
for I/N Kote (described below). The I/N Tek facility is located near New
Carlisle, Indiana. The Company, which owns, through its subsidiary, a 60%
interest in the I/N Tek partnership is, with certain limited exceptions, the
sole supplier of hot band to be processed by the I/N Tek facility and generally
has exclusive rights to the production capacity of the facility.

     In September 1989, a wholly owned subsidiary of the Company formed a second
partnership, I/N Kote, with an indirect wholly owned subsidiary of NSC to
construct, own, finance and operate two sheet steel galvanizing lines adjacent
to the I/N Tek facility. The subsidiary of the Company owns a 50% interest in
I/N Kote. The I/N Kote facility consists of a hot-dip galvanizing line and an
electrogalvanizing line with a combined annual capacity of 1,000,000 tons. The
Company has guaranteed 50% of I/N Kote's term financing. I/N Kote has contracted
to acquire its cold-rolled steel substrate from the Company, which supplies the
substrate from the I/N Tek facility and the Company's Indiana Harbor Works. In
the fourth quarter of 2002, the terms of each of the I/N Tek and I/N Kote
partnerships were extended through December 31, 2021.

     The amount budgeted for 2003 capital expenditures by the Company and its
subsidiaries is approximately $114 million, largely attributable to the relining
of the No. 7 Blast Furnace. It is anticipated that capital expenditures will be
funded from cash generated by operations and borrowings under financing
arrangements. (See "Environment" below for a discussion of capital expenditures
for pollution control purposes included in the foregoing amount.)

EMPLOYEES

     The monthly average number of active employees of the Company and its
subsidiaries was approximately 6,800 and 7,400 in 2002 and 2001, respectively.
At year-end 2002 and 2001, respectively, approximately 5,040 and 5,900 employees
were represented by the United Steelworkers of America, of whom approximately 30
were on furlough or indefinite layoff at year-end 2002. Total employment costs
decreased from $571 million in 2001 to $547 million in 2002 due to reductions in
total salaries and wages and decreased benefit costs.

     The labor agreement between the Company and the United Steelworkers of
America terminated on July 31, 1999 and a new agreement was negotiated to be
effective August 1, 1999. This agreement covers wages and benefits through July
31, 2004. Among other things, this agreement provided wage increases of $.50 per
hour in 2000 and 2001, and provides for wage increases of $1.00 per hour in
2003. The agreement also contains provisions that the United Steelworkers will
cooperate with the Company to continuously improve the productivity of its
operations. At the expiration of the agreement, both parties have agreed to
negotiate a successor agreement without resorting to strikes or lockouts. The
successor agreement will be patterned on the agreements established at the time
by the other domestic integrated steel producers. Any disputes concerning
adoption of the pattern will be resolved through an arbitration process. In
consideration of the foregoing, the

                                        6
<PAGE>

Company committed to invest in primary steelmaking facilities at the Indiana
Harbor Works. One additional holiday was provided and retirement benefits were
increased for active employees and certain current retirees. Certain retiree
healthcare obligations are secured through certain trust and second mortgage
arrangements.

ENVIRONMENT

     The Company is subject to environmental laws and regulations concerning
emissions into the air, discharges into ground water and waterways, and the
generation, handling, labeling, storage, transportation, treatment and disposal
of waste material. These include various federal statutes regulating the
discharge or release of pollutants to the environment, including the Clean Air
Act, Clean Water Act, Resource Conservation and Recovery Act ("RCRA"),
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA," also known as "Superfund"), Safe Drinking Water Act, and Toxic
Substances Control Act, as well as state and local requirements. Violations of
these laws and regulations can give rise to a variety of civil, administrative,
and, in some cases, criminal actions and could also result in substantial
liabilities or require substantial capital expenditures. In addition, under
CERCLA the United States Environmental Protection Agency (the "EPA") has
authority to impose liability for site remediation on waste generators, past and
present site owners and operators, and transporters, regardless of fault or the
legality of the original disposal activity. Liability under CERCLA is strict,
joint and several.

     Capital spending for pollution control projects totaled $6 million in 2002
versus $3 million in 2001. Another $33 million (non-capital) was spent in 2002
to operate and maintain pollution control equipment compared to $37 million in
the previous year. During the five years ended December 31, 2002, the Company
has spent $209 million to construct, operate and maintain environmental control
equipment at its various locations.

     Environmental projects previously authorized and presently under
consideration will require expenditures of approximately $5 million in 2003.
During the 2004 to 2007 period it is anticipated that the Company will make
annual capital expenditures of $2 million to $5 million on environmental
projects. In addition, the Company will have ongoing annual expenditures
(non-capital) of $35 million to $40 million for the operation of air and water
pollution control facilities to comply with current federal, state and local
laws and regulations. Due to the inability to predict the cost of corrective
action that may be required under the Resource Conservation and Recovery Act and
the consent decree in the EPA lawsuit (the "1993 EPA Consent Decree"), the
Company cannot predict the amount of additional environmental expenditures that
will be required. Such additional environmental expenditures, excluding amounts
that may be required in connection with the 1993 EPA Consent Decree, however,
are not expected to be material to the financial position or results of
operations of the Company.

     The Company is a defendant in various environmental and other
administrative or judicial actions initiated by governmental agencies. Some of
these actions are described in more detail under "Legal Proceedings" below.
While it is not possible to predict the outcome of these matters, we do not
expect environmental expenditures, excluding amounts that may be required in
connection with the 1993 EPA Consent Decree, which is described below, to
materially affect the Company's results of operations or financial position.
Remediation required under the 1993 EPA Consent Decree will require significant
expenditures over the next several years that may be material to the Company's
results of operations.

ENERGY

     Coal, together with coke, all of which are purchased from independent
sources, accounted for approximately 71% of the energy consumed by the Company
at the Indiana Harbor Works in 2002 and 70% in 2001.

     Natural gas and fuel oil supplied approximately 22% of the energy
requirements of the Indiana Harbor Works in 2002 and 23% in 2001, and are used
extensively by the Company at other facilities that it owns or in which it has
an interest. Utilization of the pulverized coal injection facility has reduced
natural gas and fuel oil consumption at the Indiana Harbor Works.

     The Company both purchases and generates electricity to satisfy electrical
energy requirements at the Indiana Harbor Works. In 2002 and 2001, respectively,
the Company produced approximately 2% and 4% of its electrical energy
requirements at the Indiana Harbor Works. The purchase of electricity at the
Indiana

                                        7
<PAGE>

Harbor Works is subject to curtailment under rules of the local utility when
necessary to maintain appropriate service for various classes of its customers.

     A subsidiary of NIPSCO leases land at the Indiana Harbor Works where it
built a 90-megawatt turbine generating facility. Pursuant to a
15-year-toll-charge contract between the Company and the NIPSCO subsidiary, the
facility converts coke plant flue gas into electricity and plant steam for use
by the Company. The facility became operational in 1998. In 2002 and 2001, this
facility produced 21% and 24%, respectively, of the purchased electricity
requirements at the Indiana Harbor Works. For additional information regarding
this facility, see the discussion under "Item 1. Business -- Operations -- Raw
Materials" on page 4 and 5 of this document.

     A subsidiary of NIPSCO leases land at the Indiana Harbor Works where it
built a 75-megawatt steam turbine generating facility. Pursuant to a
15-year-toll-charge contract between the Company and the NIPSCO subsidiary, the
facility generates electricity for use by the Company utilizing steam produced
by burning waste blast furnace gas. The facility became operational in the first
half of 1996. In each of 2002 and 2001, this facility produced 19% of the
purchased electricity requirements of the Indiana Harbor Works.

FORWARD-LOOKING STATEMENTS

     This document contains forward-looking statements concerning possible or
assumed future results of operations, financing plans, competitive position,
potential growth and future expenditures. Forward-looking statements include all
statements that are not historical facts and can be identified by the use of
forward-looking terminology such as the words "believe," "expect," "anticipate,"
"intend," "plan," "estimate" or similar expressions. Undue reliance should not
be placed on any forward-looking statements, which speak only as of their dates.
Actual results could differ materially from those projected in the
forward-looking statements as a result of many factors.

DISCLOSURE AND COMPLIANCE CODE

     It is the Company's policy to provide full, fair, accurate, timely and
understandable disclosures in all reports and documents that the Company files
with or submits to the Securities and Exchange Commission, as well as in all
other public communications made by the Company. The Company has adopted a
revised Compliance Code summarizing the corporate policies and laws that apply
to all officers, directors and employees. Such Compliance Code serves as the
code of ethics for all officers and directors of the Company with respect to
disclosure matters. The Compliance Code is available to view on-line at
www.Ispat.com/ Inlandemployees. In furtherance of these policies, the officers
of the Company shall design, implement, and amend, as necessary, disclosure
controls, procedures and internal controls for financial reporting. All
officers, directors and employees shall comply with such controls and procedures
in order to promote full, fair, accurate, timely, and understandable disclosures
by the Company.

ITEM 2.  PROPERTIES.

PROPERTIES RELATING TO OPERATIONS

STEEL PRODUCTION

     All raw steel made by the Company is produced at its Indiana Harbor Works
located in East Chicago, Indiana. The property on which this plant is located,
consisting of approximately 1,900 acres, is held by the Company in fee. The
basic production facilities of the Company at its Indiana Harbor Works consist
of furnaces for making iron; basic oxygen and electric furnaces for making
steel; a continuous billet caster, a continuous combination slab/bloom caster
and two continuous slab casters; and a variety of rolling mills and processing
lines which turn out finished steel mill products. Certain of these production
facilities, including a continuous anneal line, are held by the Company under
leasing arrangements. The Company has granted the Pension Benefit Guaranty
Corporation ("PBGC") a lien upon the Caster Facility to secure the payment of
future pension funding obligations. Substantially all of the remaining property,
plant and equipment at the Indiana Harbor Works, other than the Caster Facility
and leased equipment, is subject to the lien of the First Mortgage of the
Company dated April 1, 1928, as amended and supplemented. The Indiana Harbor
Works is also subject to a second lien in favor of the United Steelworkers of
America to secure a post retirement health benefit. See "Operations--Raw Steel
Production and Mill Shipments" in Item 1 above for further information

                                        8
<PAGE>

relating to capacity and utilization of the Company's properties. The Company's
properties are adequate to serve its present and anticipated needs, taking into
account those issues discussed in "Capital Expenditures and Investments in Joint
Ventures" in Item 1 above.

     I/N Tek, a partnership in which a subsidiary of the Company owns a 60%
interest, has constructed a 1,700,000 ton annual capacity cold-rolling mill on
approximately 200 acres of land, which it owns in fee, located near New
Carlisle, Indiana. Substantially all the property, plant and equipment owned by
I/N Tek is subject to a lien securing related indebtedness. The I/N Tek facility
is adequate to serve the present and anticipated needs of the Company planned
for such facility.

     I/N Kote, a partnership in which a subsidiary of the Company owns a 50%
interest, has constructed a 1,000,000 ton annual capacity steel galvanizing
facility on approximately 25 acres of land, which it owns in fee, located
adjacent to the I/N Tek site. Substantially all the property, plant and
equipment owned by I/N Kote is subject to a lien securing related indebtedness.
The I/N Kote facility is adequate to serve the present and anticipated needs of
the Company planned for such facility.

     PCI Associates, a partnership in which a subsidiary of the Company owns a
50% interest, has constructed a pulverized coal injection facility on land
located within the Indiana Harbor Works. The Company leases PCI Associates the
land upon which the facility is located. A 50% undivided interest in
substantially all of the property, plant and equipment at the PCI facility is
subject to a long-term lease, with the balance of the PCI facility owned by PCI
Associates. The PCI facility is adequate to serve the present and anticipated
needs of the Company planned for such facility.

     The Company also owns property at the Indiana Harbor Works used in
connection with its joint project with Sun and NIPSCO. For more information
regarding this project, see the discussion under "Item 1.
Business--Operations--Raw Materials" on page 4 and 5 of this document.

     A subsidiary of the Company owns a fleet of 389 coal hopper cars (100-ton
capacity each) used in unit trains to move coal and coke to the Indiana Harbor
Works. The Company time-charters three vessels for the transportation of iron
ore and limestone on the Great Lakes. During 1998, the Company transferred
ownership of such vessels to a third party subject to a lien in favor of the
PBGC on the vessels to secure the payment of future pension funding obligations.
See "Operations--Raw Materials" in Item 1 above for further information relating
to utilization of the Company's transportation equipment. Such equipment is
adequate, when combined with purchases of transportation services from
independent sources, to meet the Company's present and anticipated
transportation needs.

     The Company also owns and maintains research and development laboratories
in East Chicago, Indiana. Such facilities are adequate to serve the Company's
present and anticipated needs.

RAW MATERIALS PROPERTIES AND INTERESTS

     Certain information relating to raw materials properties and interests of
the Company and its subsidiaries is set forth below. See "Operations--Raw
Materials" in Item 1 above for further information relating to capacity and
utilization of such properties and interests.

IRON ORE

     The operating iron ore properties of the Company's subsidiaries and of the
iron ore ventures in which the Company has an interest are as follows:

<Table>
<Caption>
                                                                              ANNUAL
                                                                       PRODUCTION CAPACITY
                                                                      (IN THOUSANDS OF GROSS
PROPERTY                                             LOCATION            TONS OF PELLETS)
--------                                             --------         ----------------------
<S>                                             <C>                   <C>
Empire Mine...................................  Palmer, Michigan              6,300
Minorca Mine..................................  Virginia, Minnesota           2,700
</Table>

     Effective December 31, 2002, the Company sold part of its interest in the
Empire Partnership to a subsidiary of Cleveland-Cliffs, Inc., thereby reducing
its interest in the Empire Mine from 40% to 21%. Certain related fluxing
equipment was also sold. Cleveland-Cliffs, Inc. has indemnified the Company for
liabilities associated with the mine. The Company will have the option to sell
its remaining interest in the Empire Partnership to a subsidiary of
Cleveland-Cliffs, Inc. at any time after December 31, 2007 at a price

                                        9
<PAGE>

defined in the sales agreement. In addition, for twelve years, the Company will
purchase from subsidiaries of Cleveland-Cliffs, Inc. all of its pellet
requirements beyond those produced by the Minorca Mine. The price of the pellets
is fixed for the first two years and then, adjusted over the term of the
agreement based on various market index factors.

     The Company, through a subsidiary, is the sole owner and operator of the
Minorca Mine. The Company has granted the PBGC a lien on the Minorca Mine
property to secure the payment of future pension funding obligations. The
Company also owns a 38% interest in the Butler Taconite project (permanently
closed in 1985) in Nashwauk, Minnesota.

     The reserves at the Empire Mine and Minorca Mine are held under leases
expiring, or expected at current production rates to expire, between 2012 and
2040. The Company's share of the production capacity of its interests in such
iron ore properties, in combination with supply commitments undertaken by
subsidiaries of Cleveland-Cliffs, Inc., are sufficient to provide the majority
of its present and anticipated iron ore pellet requirements. Any remaining
requirements have been and are expected to continue to be readily available from
independent sources.

OTHER PROPERTIES

     The Company and one of its subsidiaries lease approximately 20% of the
space in the Inland Steel Building located at 30 West Monroe Street, Chicago,
Illinois. The Company's lease agreement expires December 31, 2006.

     A subsidiary of the Company holds in fee a parcel of 7 acres of land in
Oakbrook Terrace, Illinois, which is for sale. The Company also holds in fee
approximately 300 acres of land adjacent to the I/N Tek and I/N Kote sites, this
land is available for future development. Approximately 1,060 acres of rural
land, which are held in fee at various locations in the north-central United
States by various raw materials ventures, are also for sale.

ITEM 3.  LEGAL PROCEEDINGS

     On June 10, 1993, the U.S. District Court for the Northern District of
Indiana entered a consent decree that resolved all matters raised by a lawsuit
filed by the EPA in 1990 (the "1993 EPA Consent Decree") against, among others,
Inland Steel Company (the "Predecessor Company"). The 1993 EPA Consent Decree
assessed a $3.5 million cash fine, requires the Company to undertake
environmentally beneficial projects at the Indiana Harbor Works, and requires
$19 million plus interest to be spent in remediating sediment in portions of the
Indiana Harbor Ship Canal and Indiana Harbor Turning Basin. The Company has paid
the fine and substantially completed the $7 million project. The Company's
reserve for the remaining environmental obligations under the 1993 EPA Consent
Decree totaled $27.7 million as of December 31, 2002. The 1993 EPA Consent
Decree also requires remediation of the Company's Indiana Harbor Works site. The
1993 EPA Consent Decree establishes a three-step process, each of which requires
approval by the EPA, consisting of: assessment of the site (including
stabilization measures), evaluation of remediation alternatives and remediation
of the site. The Company is presently assessing the extent of environmental
contamination. It is anticipated that this assessment will cost approximately $2
million to $4 million per year over the next several years. Because neither the
nature and the extent of the contamination nor the remedial actions can be
determined until the first two steps are completed, the Company cannot presently
reasonably estimate the costs of, or the time required to satisfy, our
obligations under the consent decree, but it is expected that remediation of the
site will require significant expenditures over the next several years that may
be material to the Company's financial position and results of operations.
Insurance coverage with respect to work required under the 1993 EPA Consent
Decree is not significant.

     In October 1996, the Indiana Department of Environmental Management, as
lead administrative trustee, notified the Company and other potentially
responsible parties that the natural resource trustees (which also include the
Indiana Department of Natural Resources, the U.S. Department of the Interior,
the Fish and Wildlife Service and the National Park Service) intend to perform a
natural resource damage assessment on the Grand Calumet River and Indiana Harbor
Canal System. The notice states that the Company has been identified as a
potentially responsible party due to alleged releases of hazardous substances
from its Indiana Harbor Works facility. Ispat and the Company have notified
Ryerson Tull, Inc. of their intention to seek indemnification and other remedies
under the May 27, 1998 Merger Agreement among Ispat, the Company,
                                        10
<PAGE>

Inland Merger Sub, Inc. and Inland Steel Industries, Inc. (the predecessor
company to Ryerson Tull, Inc.), as amended, and on other grounds, for any losses
in connection with this matter. At this time, it is not possible to accurately
predict the amount of the Company's potential liability or whether this
potential liability could materially affect our financial position.

     The U.S. Comprehensive Environmental Response, Compensation, and Liability
Act, also known as Superfund, and analogous state laws can impose liability for
the entire cost of cleanup at a site upon any of the current or former owners or
operators or parties who sent waste to the site, regardless of fault or the
lawfulness of the activity that caused the contamination. The Company is a
potentially responsible party at several state and federal Superfund sites.
Except for the Four County Landfill described below, the Company believes its
liability at these sites is either de minimis or substantially resolved. The
Company could, however, incur additional costs or liabilities at these sites if
additional cleanup is required, private parties sue for personal injury or
property damage, or other responsible parties sue for reimbursement of costs
incurred to clean up the sites. The Company could also be named a potentially
responsible party at other sites if its wastes or its predecessor's generated
wastes were disposed of at a site that later became a Superfund site.

     The Company received a Special Notice of Potential Liability from the
Indiana Department of Environmental Management (IDEM) on February 18, 1992
relating to releases of hazardous substances from the Four County Landfill Site
in Fulton County, Indiana. The Company, along with other potentially responsible
parties (PRP's), has entered into two agreed orders with IDEM pursuant to which
the PRP's agreed to perform a remedial investigation and feasibility study for
the site, pay certain past and future IDEM costs and provide funds for operation
and maintenance necessary for stabilization of the First Operable Unit of the
site. The remedial investigation and feasibility study work is complete. With
respect to the cost of the remaining work on the First Operable Unit, IDEM's
most current estimate is $676,000. Under the terms of the PRP agreement, the
Company has an approximate 7.2% share ($49,000).

     In July 2001, IDEM selected the remedy for the Second Operable Unit at the
Four County Landfill. The Company is a member of a group that is negotiating
with IDEM to resolve any liability for the Second Operable Unit as well as
remaining obligations with regard to the First Operable Unit. IDEM has estimated
the costs for the Second Operable Unit to be approximately $1,000,000, with an
additional contingent remedy estimated to cost approximately $2,100,000, to be
implemented only if the selected remedy is deemed to be inadequate. The Company
presently intends to participate in the settlement that is being negotiated at a
level that is consistent with its participation in the PRP Agreement for the
First Operable Unit, which would reflect, at a maximum, approximately $223,200.
IDEM has a trust account holding approximately $800,000 for use in the
implementation of the First and the Second Operable Unit remedies.

     In July 2001, the United States Environmental Protection Agency (EPA) filed
suit against the Company and other PRP's, seeking recovery of past response
costs which it alleged it has expended at the Four County Landfill Site. On
February 6, 2003, a Consent Decree was issued by the U.S. District Court of
Northern Indiana, which resolved the EPA's cost recovery suit. As a result of
that Consent Decree, the Company has been required to pay approximately $13,000
in past response costs to the EPA.

     On July 2, 2002, the Company received a notice of violation ("NOV") issued
by the US Environmental Protection Agency against the Company, Indiana Harbor
Coke Company, L.P. ("IHCC") and Cokenergy, Inc., alleging violations of air
quality and permitting regulations for emissions from the Heat Recovery Coal
Carbonization facility which is operated by IHCC. An amended NOV stating similar
allegations was issued on August 8, 2002. Ispat and the Company have notified
Ryerson Tull, Inc. of their intention to seek indemnification and other remedies
under the May 27, 1998 Merger Agreement among Ispat, the Company, Inland Merger
Sub, Inc. and Inland Steel Industries, Inc. (the predecessor company to Ryerson
Tull, Inc.), as amended, and other grounds, for any losses in connection with
this matter. At this time, it is not possible to predict whether the Company
will be found liable for any violation and, if, in fact, there were to be such a
finding, the amount of the Company's potential liability or whether this
potential liability could materially affect the financial position of the
Company.

     In addition to the foregoing, the Company is a party to a number of legal
proceedings arising in the ordinary course of its business. The Company does not
believe that the adverse determination of any such pending routine litigation,
either individually or in the aggregate, will have a material adverse effect on
its business, financial condition, results of operations, cash flows or
prospects.

                                        11
<PAGE>

ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.

     The Company meets the conditions set forth in General Instruction I(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
I(2), the information called for by this Item.

                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.

     The Company is an indirect wholly owned subsidiary of Ispat. Common stock
dividends of $0 million and $11.8 million were declared and paid during 2002 and
2001, respectively. In connection with the acquisition, an affiliate of the
Company entered into a credit agreement dated July 16, 1998, as amended (the
"Credit Agreement") for a $860 million senior secured term credit facility. The
terms of the Credit Agreement restrict the payment of dividends and other
Restricted Payments (as defined in the Credit Agreement). At December 31, 2002,
no additional dividends or other Restricted Payments, other than certain
specifically allowed types of Restricted Payments, including dividends on the
preferred stock held by an affiliate, could have been paid. The Company has no
Common Stock which is owned by non-affiliates.

ITEM 6.  SELECTED FINANCIAL DATA.

     The Company meets the conditions set forth in General Instruction I(2)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
I(2), the information called for by this Item.

ITEM 7.  MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS.

     The Company reported a net loss of $7.1 million in 2002 as compared with a
loss of $126.0 million in 2001.

     The following table summarizes selected earnings and other data:

<Table>
<Caption>
                                                                2002       2001
                                                              --------   --------
                                                               (DOLLARS AND TONS
                                                                 IN MILLIONS)
<S>                                                           <C>        <C>
Net sales...................................................  $2,303.4   $2,084.1
Operating profit (loss).....................................      33.0     (127.6)
Net loss....................................................      (7.1)    (126.0)
Net tons shipped............................................       5.7        5.4
</Table>

     Net sales in 2002 of $2,303.4 million were 10.5 percent higher than net
sales of $2,084.1 million in 2001. The increase in sales was due to an increase
in shipments of 5.6 percent, and an increase of 4.6 percent in average selling
prices. The increase in prices resulted mainly from an improvement in spot
market prices.

     Operating costs (excluding depreciation and selling, general and
administrative expense) of $2,143.5 million increased 3.3 percent for 2002 due
to ongoing cost savings efforts and lower natural gas costs that was offset
negatively by the increase in sales shipments and by the impairment of the 2A
Bloomer and 21" Mill and the write-off of the assets associated with the Empire
Iron Ore Mine.

     Depreciation expense of $99.1 million decreased $5.2 million or 5.0 percent
from $104.3 million in the prior year.

     Selling, general and administrative expense of $27.8 million decreased 14.7
percent from $32.6 million in the year-ago period due to decreased spending.

     Operating profit of $33.0 million for the current year compared to a loss
of $127.6 million a year ago, an improvement of $160.6 million due to the items
noted above.

     Other (income) expense, net of $0.4 million of income in 2002 decreased by
$19.3 million from $19.7 million of income in 2001 due to the sale of pollution
allowances as well as decreased interest income. In December of 2001, the
Company sold 1,368 tons of Nitrous Oxide ("NOx") allowances to a utility company
for $18.1 million. NOx allowances sold were part of an overall bank of emission
allowances and credits

                                        12
<PAGE>

(collectively, "rights") owned by the Company. Generally, these rights arose
from actions taken by the Company or the state to reduce the emission of air
pollutants. As the Company evaluates its future development plans and
contemporaneous environmental regulation, it may, from time to time, determine
that additional rights are surplus to its operations. If determined to be
surplus, the Company will seek to liquidate these surplus assets. No
liquidations occurred in 2002.

     Interest expense of $77.0 million in 2002 decreased by $17.4 million from
$94.4 million in 2001 due to a reduction in interest rates.

OUTLOOK FOR 2003

     The Company looks forward to 2003 with optimism. However, the prevailing
uncertainties in the global political and economic environment cannot be
ignored. Any protracted instability caused by military conflict or other
developments could have an adverse effect on the Company, and could
significantly alter the outlook.

     The Company expects to benefit from improvements in the prices of its
contract business. Simultaneously, costs are also likely to increase, resulting
primarily from increases in metallics and energy prices, post-retirement
benefits and the volume of purchased semi-finished product due to the No. 7
Blast Furnace reline. The challenges for 2003 include the successful reline and
improvement of the No. 7 Blast Furnace. With the anticipated contractual price
increases and continuing cost reduction efforts, the Company expects to achieve
higher levels of operating and net income.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The Company had $1,248.9 million of long-term debt (including debt due
within one year) outstanding at December 31, 2002. Of this amount, $893.5
million is floating rate debt with a fair value of $668.4 at December 31, 2002.
The remaining $355.4 million of fixed rate debt had a fair value of $247.7
million. Assuming a hypothetical 10% decrease in interest rates at December 31,
2002, the fair value of this fixed rate debt would be estimated to be $256.2
million. Fair market values are based upon market prices or current borrowing
rates with similar rates and maturities.

     The Company utilizes derivative commodity instruments not for trading
purposes but to hedge exposure to fluctuations in the costs of natural gas and
certain nonferrous metal commodities. A hypothetical 10% decrease in commodity
prices for open derivative commodity instruments as of December 31, 2002 would
reduce pre-tax income by $1.5 million.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The consolidated financial statements (including the financial statement
schedules listed under Item 14(a)1 of this report) of the Company called for by
this Item, together with the Independent Auditors' Report dated January 24, 2003
are set forth on pages F-2 to F-31 inclusive, of this Report on Form 10-K, and
are hereby incorporated by reference into this Item. Financial statement
schedules not included in this Report on Form 10-K have been omitted because
they are not applicable or because the information called for is shown in the
consolidated financial statements or notes thereto.

     Unaudited consolidated quarterly sales and earnings information of the
Company for the years ended December 31, 2002, 2001 and 2000 is set forth in
Note 20 of Notes to Consolidated Financial Statements (see F-30), which is
hereby incorporated by reference into this Item.

                                        13
<PAGE>

ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

     None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     The Company meets the conditions set forth in General Instruction I(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
I(2), the information called for by this Item.

ITEM 11.  EXECUTIVE COMPENSATION.

     The Company meets the conditions set forth in General Instruction I(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
I(2), the information called for by this Item.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The Company meets the conditions set forth in General Instruction I(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
I(2), the information called for by this Item.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The Company meets the conditions set forth in General Instruction I(1)(a)
and (b) of Form 10-K and is therefore omitting, pursuant to General Instruction
I(2), the information called for by this Item.

                                        14
<PAGE>

                                    PART IV

ITEM 14.  DISCLOSURE CONTROLS AND PROCEDURES

     Within the 90-day period prior to the filing of this report, evaluations
were carried out under the supervision and with the participation of the
Company's management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rule 13a-14(c) under the Securities
Exchange Act of 1934). Based upon those evaluations, the Chief Executive Officer
and Chief Financial Officer concluded that the design and operation of these
disclosure controls and procedures were effective. No significant changes have
been made in our internal controls or in other factors that could significantly
affect these controls subsequent to the date of the evaluations.

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

     (A) DOCUMENTS FILED AS A PART OF THIS REPORT.

          1. CONSOLIDATED FINANCIAL STATEMENTS. The consolidated financial
     statements listed below are set forth on pages F-2 to F-31 inclusive, of
     this Report and are incorporated by reference in Item 8 of this Annual
     Report on Form 10-K.

             Independent Auditors' Report dated January 24, 2003

             Consolidated Statements of Operations and Consolidated Statements
        of Comprehensive Income for the years ended December 31, 2002, 2001 and
        2000

             Consolidated Statements of Cash Flows for the years ended December
        31, 2002, and 2001

             Consolidated Balance Sheets at December 31, 2002 and 2001

             Consolidated Statements of Stockholders' (Deficit) Equity for the
        years ended December 31, 2002, 2001 and 2000

             Notes to Consolidated Financial Statements

             Financial Statement Schedule II (Valuation and Qualifying Accounts)
        for the years ended December 31, 2002, 2001 and 2000

          2. EXHIBITS. The exhibits required to be filed by Item 601 of
     Regulation S-K are listed in the "Exhibit Index," which is attached hereto
     and incorporated by reference herein.

     (B) REPORTS ON FORM 8-K.

          No reports on Form 8-K were filed by the Company during the quarter
     ended December 31, 2002.

                                        15
<PAGE>

                                     INDEX

                                       TO

                       CONSOLIDATED FINANCIAL STATEMENTS

                                       OF

                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

<Table>
<Caption>
                            ITEM                              PAGE
                            ----                              ----
<S>                                                           <C>
Independent Auditors' Report dated January 24, 2003.........   F-2
Consolidated Statements of Operations and Consolidated
  Statements of Comprehensive Income for the years ended
  December 31, 2002, 2001 and 2000..........................   F-3
Consolidated Statements of Cash Flows for the years ended
  December 31, 2002, 2001 and 2000..........................   F-4
Consolidated Balance Sheets at December 31, 2002 and 2001...   F-5
Consolidated Statements of Stockholders' (Deficit) Equity
  for the years ended December 31, 2002, 2001 and 2000......   F-6
Notes to Consolidated Financial Statements..................   F-7
Financial Statement Schedule II (Valuation and Qualifying
  Accounts) for the years ended December 31, 2002, 2001 and
  2000......................................................  F-31
</Table>

                                       F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
  ISPAT INLAND INC.
  East Chicago, Indiana

     We have audited the accompanying consolidated balance sheets of Ispat
Inland Inc. and its subsidiaries (the "Company") as of December 31, 2002 and
2001, and the related consolidated statements of operations, comprehensive
income, stockholders' (deficit) equity and cash flows for each of the three
years in the period ended December 31, 2002. Our audits also included the
financial statement schedule II as of December 31, 2002, 2001, and 2000 and for
the years then ended, listed at Item 14a. These financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on the financial statements and
financial statement schedule based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company at December 31,
2002 and 2001, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 2002, in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, such financial statement schedule as of December 31, 2002, 2001,
and 2000 and for the years then ended, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

Deloitte & Touche LLP

Chicago, Illinois
January 24, 2003

                                       F-2
<PAGE>

                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                                       YEAR ENDED DECEMBER 31
                                                                ------------------------------------
                                                                  2002          2001          2000
                                                                --------      --------      --------
                                                                       (DOLLARS IN MILLIONS)
<S>                                                             <C>           <C>           <C>
SALES.......................................................    $2,303.4      $2,084.1      $2,383.6
OPERATING COSTS AND EXPENSES:
  Cost of goods sold (excluding depreciation)...............     2,082.1       2,064.1       2,181.8
  Workforce reduction.......................................        (0.6)         18.2           4.1
  Legal settlement..........................................          --          (7.5)         15.5
  Asset impairment charge...................................        62.0
  Selling, general and administrative expenses..............        27.8          32.6          40.4
  Depreciation..............................................        99.1         104.3         106.0
                                                                --------      --------      --------
     Total..................................................     2,270.4       2,211.7       2,347.8
                                                                --------      --------      --------
OPERATING PROFIT (LOSS).....................................        33.0        (127.6)         35.8
OTHER (INCOME) AND EXPENSE:
  Other income, net.........................................        (0.4)        (19.7)         (2.3)
  Interest expense on debt..................................        77.0          94.4          97.2
                                                                --------      --------      --------
LOSS BEFORE INCOME TAXES....................................       (43.6)       (202.3)        (59.1)
BENEFIT FOR INCOME TAXES....................................       (17.4)        (73.2)        (25.5)
                                                                --------      --------      --------
NET LOSS BEFORE EXTRAORDINARY INCOME........................       (26.2)       (129.1)        (33.6)
Gain on early extinguishment of debt, net of tax............        19.1           3.1           0.7
                                                                --------      --------      --------
NET LOSS....................................................    $   (7.1)     $ (126.0)     $  (32.9)
                                                                ========      ========      ========
</Table>

                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<Table>
<Caption>
                                                                     YEAR ENDED DECEMBER 31
                                                                --------------------------------
                                                                 2002         2001         2000
                                                                -------      -------      ------
                                                                     (DOLLARS IN MILLIONS)
<S>                                                             <C>          <C>          <C>
NET LOSS....................................................    $  (7.1)     $(126.0)     $(32.9)
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX:
  Unrealized loss on securities.............................                                (1.1)
  Reclassification adjustment for losses included in net
     loss...................................................         --          0.3          --
  Minimum pension liability adjustment......................     (251.1)      (200.7)      (31.6)
                                                                -------      -------      ------
     Total..................................................     (251.1)      (200.4)      (32.7)
                                                                -------      -------      ------
COMPREHENSIVE LOSS..........................................    $(258.2)     $(326.4)     $(65.6)
                                                                =======      =======      ======
</Table>

                 See Notes to Consolidated Financial Statements
                                       F-3
<PAGE>

                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                                   YEAR ENDED DECEMBER 31
                                                              ---------------------------------
                                                                2002        2001        2000
                                                              ---------   ---------   ---------
                                                                    (DOLLARS IN MILLIONS)
<S>                                                           <C>         <C>         <C>
OPERATING ACTIVITIES
  Net loss..................................................  $    (7.1)  $  (126.0)  $   (32.9)
  Adjustments to reconcile net loss to net cash from
    operating activities:
    Gain from early extinguishment of debt..................      (30.0)       (5.0)       (1.6)
    Loss on sale of available for sale securities...........         --         0.5          --
    Depreciation............................................       99.1       104.3       106.0
    Deferred employee benefit cost..........................         --         7.7          --
    Amortization of debt premium............................       (1.1)       (1.5)       (1.6)
    Undistributed earnings from joint ventures..............       (9.1)       (8.5)      (18.7)
    Loss from asset impairment..............................       62.0          --          --
    Loss(Gain) on sale of property, plant and equipment.....       (0.4)        0.5        (0.6)
    Deferred income taxes...................................       (4.9)      (71.1)      (11.4)
    Change in:
      Receivables...........................................      (63.3)        2.8        51.4
      Inventories...........................................      (31.4)      119.4         6.5
      Prepaid expenses and other assets.....................       (1.9)       46.1       (25.8)
      Accounts payable......................................        6.6       (67.7)       (1.5)
      Payables to/receivables from related companies........       (8.9)        0.4         6.9
      Other accrued liabilities.............................        3.8       (26.6)        2.6
      Deferred employee benefit cost........................       (1.3)     (113.9)      (50.5)
    Other items.............................................        9.2         0.9        (0.3)
                                                              ---------   ---------   ---------
    Net adjustments.........................................       28.4       (11.7)       61.4
                                                              ---------   ---------   ---------
         Net cash from operating activities.................       21.3      (137.7)       28.5
                                                              ---------   ---------   ---------
INVESTING ACTIVITIES
  Capital expenditures......................................      (52.4)      (28.6)      (83.0)
  Investments in and advances to joint ventures, net........       10.6         7.7         7.8
  Proceeds from sale of property, plant and equipment.......        0.4         0.5         2.0
  Proceeds from sale of available for sale securities.......         --         4.0          --
                                                              ---------   ---------   ---------
         Net cash from investing activities.................      (41.4)      (16.4)      (73.2)
                                                              ---------   ---------   ---------
FINANCING ACTIVITIES
  Principal payments on long-term debt......................      (19.9)      (15.0)      (19.9)
  Proceeds from note receivable from related company, net...       (3.2)        2.0         4.0
  Dividends paid............................................       (2.3)      (18.6)      (15.4)
  Bank overdrafts...........................................      (14.3)        2.7       (22.1)
  Proceeds from note payable to related company.............        1.6       154.2          --
  Proceeds from revolver borrowings.........................    2,242.0     2,200.0     2,046.0
  Repayments of revolver borrowings.........................   (2,198.0)   (2,171.0)   (1,937.0)
                                                              ---------   ---------   ---------
         Net cash from financing activities.................        5.9       154.3        55.6
                                                              ---------   ---------   ---------
Net change in cash and cash equivalents.....................      (14.2)        0.2        10.9
Cash and cash equivalents--beginning of year................       24.2        24.0        13.1
                                                              ---------   ---------   ---------
Cash and cash equivalents--end of year......................  $    10.0   $    24.2   $    24.0
                                                              =========   =========   =========
SUPPLEMENTAL DISCLOSURES
  Cash paid during the year for:
    Interest (net of amount capitalized)....................  $    74.2   $   100.2   $    85.9
    Income taxes, net.......................................  $      --   $      --   $      --
  Non-cash activity:
    Deferred taxes related to comprehensive income items....  $   142.9   $   114.1   $    18.6
    ROS capital contribution................................  $      --   $    13.0   $      --
</Table>

                 See Notes to Consolidated Financial Statements

                                       F-4
<PAGE>

                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES
                          CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                              DECEMBER 31, 2002   DECEMBER 31, 2001
                                                              -----------------   -----------------
                                                                     (DOLLARS IN MILLIONS--
                                                                     EXCEPT PER SHARE DATA)
<S>                                                           <C>                 <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................      $   10.0            $   24.2
  Receivables, less provision for allowances, claims and
     doubtful accounts of $17.0 and $16.7...................         257.5               194.2
  Receivables from related companies........................           8.0                 3.3
  Inventories...............................................         443.1               413.1
  Prepaid expenses and other................................           2.8                 2.2
  Deferred income taxes.....................................          35.9                35.2
                                                                  --------            --------
     Total current assets...................................         757.3               672.2
                                                                  --------            --------
Investments in and advances to joint ventures...............         214.8               245.7
Property, plant and equipment, net..........................       1,733.9             1,805.4
Note receivable from related companies......................           6.1                 2.9
Deferred income taxes.......................................         321.8               174.7
Pension intangible asset....................................          73.4                81.2
Other assets................................................          56.5                55.2
                                                                  --------            --------
     Total Assets...........................................      $3,163.8            $3,037.3
                                                                  ========            ========
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
  Accounts payable..........................................      $  178.7            $  172.1
  Bank overdrafts...........................................           8.5                22.8
  Payables to related companies.............................           7.8                12.0
  Pension contribution......................................          54.5                  --
  Accrued expenses and other liabilities:
     Salaries, wages and commissions........................          57.0                51.8
     Taxes--Property, real estate and other taxes...........          63.4                63.9
     Interest on debt.......................................           3.6                 3.9
     Other..................................................          15.8                16.4
Long-term debt due within one year to related companies.....           7.0                 7.0
                                                                  --------            --------
       Total current liabilities............................         396.3               349.9
Long-term debt:
  Related companies.........................................         817.3               822.7
  Other.....................................................         424.6               424.6
Deferred employee benefits..................................       1,705.4             1,368.6
Other long-term obligations.................................          58.4                49.2
                                                                  --------            --------
       Total liabilities....................................       3,402.0             3,015.0
                                                                  --------            --------
Commitments and contingencies (Note 11)
Stockholders' (deficit) equity
  Preferred stock, $.01 par value, 100 shares authorized,
     100 shares issued and outstanding, liquidation value
     $90....................................................          90.0                90.0
  Common stock, $.01 par value, 1,000 shares authorized, 100
     shares issued and outstanding..........................         320.0               320.0
  Accumulated deficit.......................................        (164.5)             (155.1)
  Accumulated other comprehensive loss......................        (483.7)             (232.6)
                                                                  --------            --------
       Total stockholders' (deficit) equity.................        (238.2)               22.3
                                                                  --------            --------
       Total liabilities and stockholders' (deficit)
          equity............................................      $3,163.8            $3,037.3
                                                                  ========            ========
</Table>

                 See Notes to Consolidated Financial Statements
                                       F-5
<PAGE>

                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

<Table>
<Caption>
                                                                           ACCUMULATED
                                                           (ACCUMULATED       OTHER           TOTAL
                                                             DEFICIT)     COMPREHENSIVE   STOCKHOLDERS'
                                      PREFERRED   COMMON     RETAINED        (LOSS)         (DEFICIT)
                                        STOCK     STOCK      EARNINGS        INCOME          EQUITY
                                      ---------   ------   ------------   -------------   -------------
                                                            (DOLLARS IN MILLIONS)
<S>                                   <C>         <C>      <C>            <C>             <C>
Balance at January 1, 2000..........    $90.0     $320.0     $  37.8         $   0.5         $ 448.3
Net loss............................       --        --        (32.9)             --           (32.9)
Dividends paid......................       --        --        (15.4)             --           (15.4)
Other comprehensive loss, net of
  tax...............................       --        --           --           (32.7)          (32.7)
                                        -----     ------     -------         -------         -------
Balance at December 31, 2000........     90.0     320.0        (10.5)          (32.2)          367.3
Net loss............................       --        --       (126.0)             --          (126.0)
Dividends paid......................       --        --        (18.6)             --           (18.6)
Other comprehensive loss, net of
  tax...............................       --        --           --          (200.4)         (200.4)
                                        -----     ------     -------         -------         -------
Balance at December 31, 2001........     90.0     320.0       (155.1)         (232.6)           22.3
Net loss............................       --        --         (7.1)             --            (7.1)
Dividends paid......................       --        --         (2.3)             --            (2.3)
Other comprehensive loss, net of
  tax...............................       --        --           --          (251.1)         (251.1)
                                        -----     ------     -------         -------         -------
Balance at December 31, 2002........    $90.0     $320.0     $(164.5)        $(483.7)        $(238.2)
                                        =====     ======     =======         =======         =======
</Table>

                 See Notes to Consolidated Financial Statements
                                       F-6
<PAGE>

                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars in Millions except share and per share data)

NOTE 1-- NATURE OF OPERATIONS

     Ispat Inland Inc. together with its subsidiaries (the "Company"), a
Delaware corporation and an indirect wholly owned subsidiary of Ispat
International N.V. ("Ispat"), is an integrated domestic steel company. The
Company produces and sells a wide range of steels, of which approximately 99%
consists of carbon and high-strength low-alloy steel grades. It is also a
participant in certain iron ore production and steel-finishing joint ventures.

NOTE 2-- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION POLICY

     The consolidated financial statements include the accounts of the Company
and all its majority-owned subsidiaries which require consolidation.
Intercompany transactions have been eliminated in consolidation.

CASH EQUIVALENTS

     Cash equivalents are highly liquid, short-term investments purchased with
original maturities of three months or less when acquired.

INVENTORY VALUATION

     Inventories are carried at the lower of cost or market. Cost is principally
determined on a first-in, first-out ("FIFO") method. Costs include the purchase
costs of raw materials, conversion costs, and an allocation of fixed and
variable production overhead.

ACCOUNTING FOR EQUITY INVESTMENTS

     The Company's investments in less than majority-owned companies, joint
ventures and partnerships, and the Company's majority interest in the I/N Tek
(See Note 13) partnership are accounted for under the equity method.

PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment are stated at cost and depreciated using the
straight line method over the useful lives of the related assets, ranging from
25 to 45 years for buildings and 2 to 21.5 years for machinery and equipment.
Major improvements which add to productive capacity or extend the life of an
asset are capitalized while repairs and maintenance are charged to expense as
incurred. Property, plant and equipment under construction are recorded as
construction in progress until they are ready for their intended use; thereafter
they are transferred to the related category of property, plant and equipment
and depreciated over their estimated useful lives. Interest during construction
is capitalized to property, plant and equipment under construction until the
assets are ready for their intended use. Gains and losses on retirement or
disposal of assets are determined as the difference between net disposal
proceeds and carrying amount and reflected in the statement of income. The
carrying amount for long-lived assets is reviewed whenever events or changes in
circumstances indicate that an impairment may have occurred.

DEFERRED FINANCING COSTS

     Deferred financing costs are amortized over the expected terms of the
related debt.

STOCK OPTION PLAN

     In 1999, Ispat established the Ispat International N.V. Global Stock Option
Plan (the "Ispat Plan"). The Company, which participates in the Ispat Plan, has
chosen to account for stock options issued to employees using the intrinsic
value method prescribed in APB No. 25, "Accounting for Stock Issued to
Employees," and

                                       F-7
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 2-- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

related Interpretations. Accordingly, compensation cost for stock options is
measured as the excess, if any, of the quoted market price of the underlying
Ispat stock at the date of the grant over the exercise price of the employee
stock options. For disclosure purposes, proforma net income is provided as if
the fair value method had been applied (See Note 7). The Company has adopted the
disclosure requirements of Statement of Financial Accounting Standards ("SFAS")
No. 123 as amended by SFAS No. 148 "Accounting for Stock-Based
Compensation-Transition and Disclosure".

REVENUE RECOGNITION

     Revenue is recognized when the earnings process is complete and the risks
and rewards of ownership have passed to the customer, which is generally
considered to have occurred upon shipment of finished product. Provisions for
discounts to customers are recorded based on terms of sale in the same period
the related sales are recorded. The Company records estimated reductions to
revenue for customer programs and incentive offerings. The Company records all
amounts billed to a customer in a sales transaction related to shipping and
handling as revenues. All costs related to shipping and handling are included in
cost of goods sold.

INCOME TAXES

     The provision for income taxes includes income taxes currently payable or
receivable and those deferred. Under SFAS No. 109, "Accounting for Income
Taxes", deferred tax assets and liabilities are recognized for the future tax
consequences of temporary differences between the financial statement carrying
amounts of assets and liabilities and their respective tax bases. Deferred tax
assets are also recognized for the estimated future effects of tax loss
carry-forwards. Deferred tax assets and liabilities are measured using enacted
rates in effect for the year in which the differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of
changes in tax rates is recognized in the statement of operations in the period
in which the enactment date changes. Deferred tax assets are reduced through the
establishment of a valuation allowance at such time as, based on available
evidence, it is more likely than not that the deferred tax assets will not be
realized.

DERIVATIVES

     Derivative financial instruments are utilized to manage exposure to
fluctuations in cost of natural gas and specific nonferrous metals used in the
production process. SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities", requires companies to recognize all of its derivative
instruments as either assets or liabilities on the balance sheet at fair value.
The fair values of derivative financial instruments reflect the amounts the
Company would receive on settlement of favorable contracts or be required to pay
to terminate unfavorable contracts at the reporting dates thereby taking into
account the current unrealized gains or losses on open contracts. The fair value
of derivative contracts is determined using pricing models, which take into
account market prices and contractual prices of the underlying instruments, as
well as time value, yield curve, and volatility factors underlying the
positions. For derivative instruments not designated as hedging instruments,
both holding and unrealized gains or losses are recognized currently in earnings
as part of the cost of the underlying product during the period of change.

USE OF ESTIMATES

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts reported in
the consolidated financial statements and related notes to financial statements.
Actual results may differ from such estimates.
                                       F-8
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 2-- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

IMPAIRMENT OF LONG-LIVED ASSETS

     When changes in circumstance indicate the carrying amount of certain
long-lived assets may not be recoverable, the assets will be evaluated for
impairment. If the forecasted undiscounted future cash flows are less than the
carrying amount of the assets, an impairment charge to reduce the carrying value
of the assets to fair value will be recognized in the current period (See Note
17).

RECENT ACCOUNTING PRONOUNCEMENTS

     The Financial Accounting Standards Board ("FASB") has issued SFAS No. 143,
"Accounting for Asset Retirement Obligations", which is effective for all fiscal
years beginning after June 15, 2002. SFAS No. 143 addresses financial accounting
and reporting for obligations associated with the retirement of tangible long-
lived assets and the associated asset retirement costs. SFAS No. 143 requires
the fair value of liabilities for asset retirement obligations to be recognized
in the period in which the obligations are incurred if a reasonable estimate of
fair value can be made. The associated asset retirement costs are capitalized as
part of the carrying amount of the long-lived asset. The Company has estimated
the impact of adopting SFAS No. 143 on January 1, 2003, the effective date, to
be an increase in assets and liabilities of $3.8 and $6.3. A charge of $1.6 (net
of tax of $0.9) will be reflected on the Consolidated Statement of Operations as
of January 1, 2003 as a Cumulative Effect of change in Accounting Principle (See
Note 18).

     On October 3, 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", which is effective for all fiscal
years beginning after December 15, 2001. SFAS No. 144 addresses accounting and
reporting for the impairment or disposal of long-lived assets, including
discontinued operations, and establishes a single accounting model for
long-lived assets to be disposed of by sale. This standard which became
effective for the Company on January 1, 2002, did not have a material effect on
the Company's financial statements. The Company will continue to apply the
provisions of SFAS No. 144 on a prospective basis.

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections". Among other items, this statement rescinds SFAS No. 4, "Reporting
Gains and Losses from Extinguishment of Debt", and an amendment of that
Statement, SFAS No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements". Upon adoption of SFAS No. 145, any gain or loss on
extinguishments of debt that was classified as an extraordinary item in prior
periods presented that does not meet the criteria in APB Opinion No. 30,
Reporting the Results of Operations--Reporting the effects of disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions, for classification as an extraordinary item shall be
reclassified. The Company will adopt the provisions of SFAS No. 145 as of
January 1, 2003 and will report such gains and losses in the "Other (income)
expense, net" line item in accordance with SFAS No. 145.

     In June of 2002, the FASB issued SFAS No. 146, "Accounting for Exit or
Disposal Activities". SFAS No. 146 addresses significant issues regarding the
recognition, measurement, and reporting of costs that are associated with exit
and disposal activities, including restructuring activities that are currently
accounted for under EITF No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." The scope of SFAS No. 146 also includes
costs related to terminating a contract that is not a capital lease and
termination benefits that employees who are involuntarily terminated receive
under the terms of a one-time benefit arrangement that is not an ongoing benefit
arrangement or an individual deferred-compensation contract. SFAS No. 146 will
be effective for exit or disposal activities that are initiated after December
31, 2002.

                                       F-9
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 2-- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure: An amendment of FASB Statement No. 123".
This Statement amends SFAS No. 123, "Accounting for Stock-Based Compensation",
to provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, this Statement amends the disclosure requirement of SFAS No. 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The disclosure provisions of SFAS
No. 148 are applicable for fiscal years ending after December 15, 2002. As of
December 31, 2002, the Company adopted the disclosure provision of SFAS No. 148.

     In November 2002, the FASB issued Financial Interpretation No. 45 ("FIN
45"), "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others." FIN 45 requires
certain guarantees to be recorded at fair value and requires a guarantor to make
significant new disclosures, even when the likelihood of making any payments
under the guarantee is remote. Generally, FIN 45 applies to certain types of
financial guarantees that contingently require the guarantor to make payments to
the guaranteed party based on changes in an underlying that is related to an
asset, a liability, or an equity security of the guaranteed party; performance
guarantees involving contracts which require the guarantor to make payments to
the guaranteed party based on another entity's failure to perform under an
obligating agreement; indemnification agreements that contingently require the
guarantor to make payments to an indemnified party based on changes in an
underlying that is related to an asset, a liability, or an equity security of
the indemnified party; or indirect guarantees of the indebtedness of others. The
initial recognition and initial measurement provisions of FIN 45 are applicable
on a prospective basis to guarantees issued or modified after December 31, 2002.
Disclosure requirements under FIN 45 are effective for financial statements for
periods ending after December 15, 2002 and are applicable to all guarantees
issued by the guarantor subject to FIN 45's scope, including guarantees issued
prior to FIN 45. The Company does not expect that FIN 45 will have a material
effect on its financial condition, results of operations or cash flows.

     In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities" with the objective of improving
financial reporting by companies involved with variable interest entities. A
variable interest entity is a corporation, partnership, trust, or any other
legal structure used for business purposes that either (a) does not have equity
investors with voting rights, or (b) has equity investors that do not provide
sufficient financial resources for the entity to support its activities.
Historically, entities generally were not consolidated unless the entity was
controlled through voting interests. FIN 46 changes that by requiring a variable
interest entity to be consolidated by a company if that company is subject to a
majority of the risk of loss from the variable interest entity's activities or
entitled to receive a majority of the entity's residual returns or both. A
company that consolidates a variable interest entity is called the "primary
beneficiary" of that entity. FIN 46 also requires disclosures about variable
interest entities that a company is not required to consolidate but in which it
has a significant variable interest. The consolidation requirements of FIN 46
apply immediately to variable interest entities created after January 31, 2003.
The consolidation requirements of FIN 46 apply to existing entities in the first
fiscal year or interim period beginning after June 15, 2003. Also, certain
disclosure requirements apply to all financial statements issued after January
31, 2003, regardless of when the variable interest entity was established. The
Company has determined that FIN 46 will not have an impact on its financial
condition, results of operations or cash flows.

RECLASSIFICATIONS

     Certain reclassifications have been made to the prior years' financial
statements to conform to the 2002 classifications.

                                       F-10
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 3--INVENTORIES

     Inventories consist of the following:

<Table>
<Caption>
                                                              DECEMBER 31,   DECEMBER 31,
                                                                  2002           2001
                                                              ------------   ------------
<S>                                                           <C>            <C>
In-process and finished steel...............................     $294.3         $270.4
Raw materials and supplies:
  Iron ore..................................................       72.0           64.6
  Scrap and other raw materials.............................       48.3           46.3
  Supplies..................................................       28.5           31.8
                                                                 ------         ------
                                                                  148.8          142.7
                                                                 ------         ------
     Total..................................................     $443.1         $413.1
                                                                 ======         ======
</Table>

NOTE 4--PROPERTY, PLANT AND EQUIPMENT, NET

     Property, plant and equipment consists of the following:

<Table>
<Caption>
                                                              DECEMBER 31,   DECEMBER 31,
                                                                  2002           2001
                                                              ------------   ------------
<S>                                                           <C>            <C>
Land........................................................    $   46.5       $   46.5
Buildings and improvements..................................       188.4          194.5
Machinery and equipment.....................................     1,909.2        1,908.6
Construction in process.....................................        27.3           18.3
                                                                --------       --------
                                                                 2,171.4        2,167.9
Accumulated depreciation....................................       437.5          362.5
                                                                --------       --------
Property, plant and equipment, net..........................    $1,733.9       $1,805.4
                                                                ========       ========
</Table>

                                       F-11
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 5--LONG-TERM DEBT

     Long-term debt consists of the following:

<Table>
<Caption>
                                                              DECEMBER 31,   DECEMBER 31,
                                                                  2002           2001
                                                              ------------   ------------
<S>                                                           <C>            <C>
First Mortgage Bonds:
  Series U, Tranche B, due July 16, 2005....................    $  334.3       $  337.8
  Series U, Tranche C, due July 16, 2006....................       334.3          337.8
  Series R, 7.9% due January 15, 2007.......................        28.2           31.4
  Pollution Control Series 1977, 5.75% due February 1,
     2007...................................................        19.6           21.5
  Pollution Control Series 1993, 6.8% due June 1, 2013......        26.1           43.5
  Pollution Control Series 1995, 6.85% due December 1,
     2012...................................................        13.3           18.5
                                                                --------       --------
     Total First Mortgage Bonds.............................       755.8          790.5
Obligations for Industrial Development Revenue Bonds:
  Pollution Control Project No. 11, 7.125% due June 1,
     2007...................................................        21.1           21.4
  Pollution Control Project No. 13, 7.25% due November 1,
     2011...................................................        32.1           41.9
  Exempt Facilities Project No. 14, 6.7% due November 1,
     2012...................................................         5.4            5.4
  Exempt Facilities Project No. 15, 5.75% due October 1,
     2011...................................................        46.0           52.2
  Exempt Facilities Project No. 16, 7% due January 1,
     2014...................................................         7.7            7.7
                                                                --------       --------
     Total Obligations for Industrial Development Revenue
       Bonds................................................       112.3          128.6
Ispat Inland Administrative Service Company revolving credit
  facility..................................................       149.0          155.0
Ispat Inland Inventory, LLC revolving credit facility.......        76.0           26.0
Ispat International Advances:
  Ispat Financial Investments...............................          --           39.2
  Ispat International Insurance.............................          --           41.2
  Ispat International Group Finance.........................       155.8           73.8
                                                                --------       --------
     Total Ispat International Advances.....................       155.8          154.2
Total debt..................................................     1,248.9        1,254.3
Less short-term portion.....................................        (7.0)          (7.0)
                                                                --------       --------
Long-term portion of debt...................................    $1,241.9       $1,247.3
                                                                ========       ========
</Table>

     In connection with the financing of the acquisition of Ispat Inland, an
affiliate of the Company and wholly owned indirect subsidiary of Ispat, Ispat
Inland, L.P. (the "Borrower"), entered into a Credit Agreement dated July 16,
1998, as amended (the "Credit Agreement") for a senior secured term credit
facility and letter of credit with a syndicate of financial institutions for
whom Credit Suisse First Boston is the agent (the "Agent"). The Credit Agreement
consists of a $350 Tranche B Term Loan due July 16, 2005 (the "Tranche B Loan"),
a $350 Tranche C Term Loan due July 16, 2006 (the "Tranche C Loan" and together
with the Tranche B Loan, the "Term Loans") and a $160 letter of credit extending
to July 9, 2003 (the "LC" and together with the Term Loans, the "Facilities").
The LC has not been drawn upon. Each of the Tranche B Loan and Tranche C Loan
has scheduled principal repayments of $0.875 per quarter until maturity.

     On July 16, 1998, the Company issued $875 of First Mortgage Bonds as
security both for the Facilities and for an interest rate hedge (not as defined
under SFAS No. 133) owned by the Borrower as required under the Credit Agreement
(the "Hedge"). Series U, in a principal amount of $700, was issued to an
indirect subsidiary of the Borrower which, in turn, pledged the Bonds to the
Agent for the benefit of the Term Loan lenders. Series V, in a principal amount
of $160, was issued to the Agent for the benefit of the LC lenders.

                                       F-12
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 5--LONG-TERM DEBT--(CONTINUED)

Series W, in a principal amount of $15, was issued to the Agent for the benefit
of the counterparty to the Hedge.

     As a further credit enhancement under the Credit Agreement, the Facilities
and the Hedge are fully and unconditionally guaranteed for as long as the
obligations are outstanding by the Company, certain subsidiaries of the Company
and Ispat. The Company could be required to perform under the guarantee if an
event of default as defined in the Credit Agreement occurs under the Facilities.
At December 31, 2002, the Company recorded $668.5 and $0 for the Term Loans and
the Hedge, respectively in its Consolidated Balance Sheet.

     Borrowings under the Term Loans bear interest at a rate per annum equal to,
at the Borrower's option: (1) the higher of (a) the Agent's prime rate or (b)
the rate which is 1/2 of 1% in excess of the Federal Funds effective rate
(together the "Base Rate"), plus 2.75% or (2) the LIBO Rate (as defined in the
Credit Agreement) plus 3.75%. The fee for the LC is 4.00% of the LC amount per
annum (the "LC Fee"). The spread over the LIBO Rate and Base Rate and the LC Fee
will be reduced if the Company's Consolidated Leverage Ratio (as defined in the
Credit Agreement) falls to specified levels.

     In October 1998, the Borrower entered into the Hedge required under the
Credit Agreement. The Hedge consists of a five-year interest rate collar. The
Hedge is based on LIBOR with a floor of 4.50% and a ceiling of 6.26% on a
notional amount of $450 (see Note 12).

     The Company is obligated to pay interest on the Series U First Mortgage
Bonds at the rate paid by the Borrower to the Term Loan lenders without regard
to the interest rate collar, plus 1/2 of 1% per annum and on the Series V First
Mortgage Bonds at a rate equal to the LC Fee. The rate of interest paid by the
Company on the Series U First Mortgage Bonds to the Borrower, a related company,
was 5.6% and 6.4% for the years ended December 31, 2002 and 2001, respectively.

     With the exception of Series U, V and W, the First Mortgage Bonds are the
obligation solely of the Company and have not been guaranteed or assumed by or,
otherwise, become the obligation of Ispat or any of its other subsidiaries. Each
series of First Mortgage Bonds issued by the Company is limited to the principal
amount outstanding, with the Pollution Control Series 1977 Bonds and the Series
R First Mortgage Bonds subject to a sinking fund. A substantial portion of the
property, plant and equipment owned by the Company at its Indiana Harbor Works
is subject to the lien of the First Mortgage. This property had a book value of
approximately $1,600 on December 31, 2002 and $1,700 on December 31, 2001. This
property is also subject to a subordinate lien in favor of the United
Steelworkers of America to secure a post retirement health benefit.

     The Credit Agreement restricts the payment of dividends and other
Restricted Payments (as defined in the Credit Agreement) to 50% of Consolidated
Net Income (as defined in the Credit Agreement) plus certain specifically
allowed types of Restricted Payments. At December 31, 2002 and 2001, no
dividends or other Restricted Payments, in addition to those specifically
allowed, which included dividends on the preferred stock held by a subsidiary of
the Borrower, could have been paid.

     The Company must also maintain a minimum Consolidated EBITDA (as defined in
the Credit Agreement). The Company was in compliance with this covenant at
December 31, 2002. The Credit Agreement also contains other covenants that,
among other things, prohibit or limit the ability of the Company or the Borrower
to incur indebtedness, create liens, engage in transactions with affiliates,
sell assets and engage in mergers and consolidations. Any loans from Ispat (see
"Ispat International Advances" Note 10) cannot be repaid until the Company's
leverage falls to specified levels.

     Ispat Inland Administrative Service Company ("IIASC"), a wholly owned
subsidiary of the Company established to provide a supplemental source of funds
to the Company, has a $165 committed revolving credit facility with a group of
banks, extending to November of 2005. The Company has agreed to sell
substantially
                                       F-13
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 5--LONG-TERM DEBT--(CONTINUED)

all of its receivables to IIASC to secure this facility. Provisions of the
credit agreement limit or prohibit the Company from merging, consolidating, or
selling its assets and require IIASC to meet minimum net worth and leverage
ratio tests. Under terms of the secured revolving credit agreement, based on the
level of the leverage ratio and net worth calculations of the Company, beginning
early in 2002, the trustee retained initial control over cash lockbox receipts.
On a daily basis, the trustee remits the remaining cash to the Company after
first using the receipts to make any payments prescribed by the secured
revolving credit agreement. This change in practice has no impact on cash
available to the Company under the facility. At December 31, 2002, based on the
amount of eligible collateral, there was no additional availability under the
line. Drawings under the line included $149 of loans and $12.2 of letters of
credit issued for the purchase of commodities on the international market and as
security under various insurance and workers compensation coverages.

     In January 1999, the Company established a five-year $120 revolving credit
facility with a group of banks. The Company has agreed to sell substantially all
of its raw material, in-process and finished goods inventory to Ispat Inland
Inventory, LLC ("III"), a wholly owned subsidiary of the Company, to secure this
facility. Provisions of the credit agreement require III to maintain a minimum
net worth. At December 31, 2002, based on the amount of eligible collateral,
there was $25 of availability under the line.

     At December 31, 2002 and 2001, the amount outstanding under both the IIASC
and III revolving credit facilities were shown as a long term obligation. The
Company has both the ability and intent to refinance these obligations as they
mature under the respective credit agreements. The average interest rates on
these facilities range from 2.6% to 3.1% and $76 of the outstanding balance is
repayable in 2004 and $149 in 2005, when the credit facilities terminate.

     In the first quarter of 2002, the Company purchased $14.3 of its Pollution
Control Series 1993, $0.8 of its Pollution Control Series 1977, $3.8 of its
Pollution Control Series 1995 and $0.9 of its Series R Bonds at discounts from
face value. As a result of these early redemptions, the Company recognized an
extraordinary gain of $14.0 ($8.9 after tax) and an ordinary gain on $0.5. In
the second quarter of 2002, the Company purchased $0.2 of its Series R Bonds,
$0.6 of its Pollution Control Series 1977, $1.4 of its Pollution Control Series
1993, $0.8 of its Pollution Control Series 1995, $8.6 of its Pollution Control
Series 13, and $6.2 of its Pollution Control Series 15 at discounts from face
value. As a result of these early redemptions, the Company recognized an
extraordinary gain of $15.2 ($9.7 after tax) and an ordinary gain of $0.2. In
the fourth quarter of 2002, the Company purchased $2.0 of its Series R Bonds,
$0.3 of its Pollution Control Series 1977 and $0.1 of its Pollution Control
Series 1993 at discounts from face value. As a result of these early
redemptions, the Company recognized an extraordinary gain of $0.8 ($0.5 after
tax).

     In the second quarter of 2001, the Company purchased $11.7 of its Series R
Bonds at a discount from face value. As a result of this early redemption, the
Company recognized a gain of $4.8 which was classified as extraordinary ($3.1
after tax). In the fourth quarter of 2001, the Company purchased $1.2 of its
Pollution Control Series 1977 at a discount from face value. As a result of this
early redemption, the Company recognized a gain of $0.2 which was classified as
ordinary. In the second quarter of 2000, the Company purchased $12.5 of its
Series R Bonds at a discount from face value. As a result of this early
redemption, the Company recognized a gain of $1.6 of which $1.0 was classified
as extraordinary ($0.7 after tax).

     Maturities of long-term debt obligations (excluding Ispat International
advances) are: $7.0 in 2003, $84.0 in 2004, $481.3 in 2005, $328.8 in 2006,
$59.8 in 2007 and $132.2 thereafter.

                                       F-14
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 6--EQUITY

COMMON STOCK

     On December 31, 2002 and 2001, the Company had 1,000 shares authorized of
common stock, $.01 par value ("Common Stock"), of which 100 shares were issued,
outstanding and owned by a wholly owned subsidiary of Ispat.

CUMULATIVE PREFERRED STOCK

     On December 31, 2002 and 2001, the Company had 100 shares authorized,
issued and outstanding of Series A 8% Cumulative Preferred Stock, $.01 par value
("Preferred Stock"), which is owned by a wholly owned subsidiary of Ispat. The
Preferred Stock has liquidation preference over the Common Stock.

NOTE 7--STOCK OPTION PLANS

     Under the terms of the Ispat International N.V. Global Stock Option Plan,
Ispat may grant options to senior management of Ispat and its affiliates for up
to 6,000,000 shares of common stock. The exercise price of each option equals
not less than the fair market value of Ispat stock on the date of grant, and an
option's maximum term is 10 years. Options are granted at the discretion of the
Ispat Board of Director's Plan Administration Committee or its delegate. The
options vest either ratably upon each of the first three anniversaries of the
grant date or upon the death, disability or retirement of the participant. The
Company has chosen to account for stock-based compensation using the intrinsic
value method prescribed in APB No. 25, "Accounting for Stock Issued to
Employees," and related Interpretations. Accordingly, compensation cost for
stock options is measured as the excess, if any, of the quoted market price of
Ispat stock at the date of the grant over the amount an employee must pay to
acquire the stock. Had compensation cost for the option plan been determined
based on the fair value at the grant date for awards in 2002 and 2000 consistent
with the provisions of SFAS No. 123, the Company's net loss for the years ended
December 31, 2002, 2001 and 2000 would have been increased to the pro forma
amounts indicated below:

<Table>
<Caption>
                                                              YEAR ENDED DECEMBER 31
                                                           ----------------------------
                                                           2002       2001        2000
                                                           -----   -----------   ------
<S>                                                        <C>     <C>           <C>
Net Loss--as reported....................................  $(7.1)    $(126.0)    $(32.9)
Deduct: Total stock-based employee compensation expense
  determined under fair value based method for all
  awards, net of related tax effects.....................   (1.1)       (1.8)      (1.3)
                                                           -----     -------     ------
Net Loss--pro forma......................................  $(8.2)    $(127.8)    $(34.2)
</Table>

     There were no options issued in 2001. The weighted average fair value at
the date of grant for options granted during 2002 and 2000 was $1.82 and $4.22,
respectively and was estimated using the Binomial Option Pricing Model with the
following weighted-average assumptions used:

<Table>
<Caption>
                                                                 YEAR OF GRANT
                                                              --------------------
                                                              2002    2001   2000
                                                              -----   ----   -----
<S>                                                           <C>     <C>    <C>
Dividend yield..............................................     --%   --%    3.85%
Expected annualized volatility..............................  83.00    --    66.00
Discount rate--Bond equivalent yield........................   5.03    --     5.27
Expected life in years......................................      8    --        8
</Table>

                                       F-15
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 7--STOCK OPTION PLANS--(CONTINUED)

     The status of the Ispat Plan with respect to the Company is summarized
below:

<Table>
<Caption>
                                                            NUMBER OF   WEIGHTED AVERAGE
                                                             SHARES      EXERCISE PRICE
                                                            ---------   ----------------
<S>                                                         <C>         <C>
Outstanding at January 1, 2000............................    670,500        $11.94
Granted...................................................    701,500          8.57
Exercised.................................................         --            --
Forfeitures...............................................   (150,000)        10.70
                                                            ---------        ------
Outstanding at December 31, 2000..........................  1,222,000         10.16
Granted...................................................         --            --
Exercised.................................................         --            --
Forfeitures...............................................    (64,000)        10.04
                                                            ---------        ------
Outstanding at December 31, 2001..........................  1,158,000         10.16
Granted...................................................    581,500          2.26
Exercised.................................................         --            --
Forfeitures...............................................   (160,000)         9.72
                                                            ---------        ------
Outstanding at December 31, 2002..........................  1,579,500        $ 7.29
                                                            =========        ======
</Table>

NOTE 8--RETIREMENT BENEFITS

PENSIONS

     The Company Pension Plan and Pension Trust is a non-contributory defined
benefit pension plan covering substantially all of its employees. Benefits for
most non-represented employees are determined under a "Cash Balance" formula as
an account balance which grows as a result of interest credits and of
allocations based on a percent of pay. Benefits for other non-represented
salaried employees are determined as a monthly benefit at retirement depending
on final pay and service. Benefits for wage and salaried employees represented
by the United Steelworkers of America are determined as a monthly benefit at
retirement based on a fixed rate and service. The Plan assets are invested in
stocks, bonds, real estate and other investments commonly found in similar
defined benefit plans.

                                       F-16
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 8--RETIREMENT BENEFITS--(CONTINUED)

     Reconciliation of the pension benefit obligation and plan assets from
December 1, 2001 and 2000 through the measurement dates of November 30, 2002 and
2001 was as follows:

<Table>
<Caption>
                                                      DECEMBER 1, 2001    DECEMBER 1, 2000
                                                           THROUGH             THROUGH
                                                      NOVEMBER 30, 2002   NOVEMBER 30, 2001
                                                      -----------------   -----------------
<S>                                                   <C>                 <C>
Change in benefit obligation:
  Benefit obligation at beginning of period.........      $2,217.9            $2,093.9
  Service cost......................................          35.7                30.6
  Interest cost.....................................         160.1               163.2
  Plan amendments...................................            --                 7.7
  Actuarial loss....................................         111.4               108.8
  Benefits paid.....................................        (202.6)             (186.3)
                                                          --------            --------
  Benefit obligation at end of period...............      $2,322.5            $2,217.9
                                                          ========            ========
Change in plan assets:
  Fair value at beginning of period.................      $1,851.6            $1,921.6
  Actual return.....................................         (93.3)                7.7
  Employer contribution.............................            --               108.6
  Benefits paid.....................................        (202.6)             (186.3)
                                                          --------            --------
  Fair value at end of period.......................      $1,555.7            $1,851.6
                                                          ========            ========
</Table>

     The plan amendment loss for the period ended November 30, 2001 reflects the
plan changes to allow for special termination benefits to be paid by the plan
(see Note 15).

     The unfunded status of the pension plan is as follows:

<Table>
<Caption>
                                                      DECEMBER 31, 2002   DECEMBER 31, 2001
                                                      -----------------   -----------------
<S>                                                   <C>                 <C>
Benefit obligation..................................      $2,322.5            $2,217.9
Fair value of assets................................       1,555.7             1,851.6
                                                          --------            --------
Unfunded status of plan.............................        (766.8)             (366.3)
Unrecognized net loss...............................         761.7               362.6
Unrecognized prior service cost.....................          73.4                81.2
                                                          --------            --------
Net amount recognized...............................      $   68.3            $   77.5
                                                          ========            ========
Amounts recognized in the consolidated balance
  sheets consist of:
Accrued benefit liability...........................      $ (756.6)           $ (354.8)
Intangible asset....................................          73.4                81.2
Accumulated other comprehensive income..............         751.5               351.1
                                                          --------            --------
Net amount recognized...............................      $   68.3            $   77.5
                                                          ========            ========
</Table>

     The following weighted average assumptions were used in accounting for the
pension plan:

<Table>
<Caption>
                                                  NOVEMBER 30,   NOVEMBER 30,   NOVEMBER 30,
                                                      2002           2001           2000
                                                  ------------   ------------   ------------
<S>                                               <C>            <C>            <C>
Discount rate...................................     7.10%          7.50%          8.00%
Expected return on plan assets..................     9.50%          9.50%          9.50%
Rate of compensation increase...................     4.00%          4.00%          4.00%
</Table>

                                       F-17
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 8--RETIREMENT BENEFITS--(CONTINUED)

     The net periodic benefit cost was as follows:

<Table>
<Caption>
                                         YEAR ENDED          YEAR ENDED          YEAR ENDED
                                      DECEMBER 31, 2002   DECEMBER 31, 2001   DECEMBER 31, 2000
                                      -----------------   -----------------   -----------------
<S>                                   <C>                 <C>                 <C>
Service cost........................       $  35.7             $  30.6             $  28.7
Interest cost.......................         160.1               163.2               158.6
Expected return on plan assets......        (194.5)             (196.5)             (194.4)
Special termination benefits........            --                 7.7                  --
Amortization........................           7.8                 7.8                 7.6
                                           -------             -------             -------
Net periodic benefit cost...........       $   9.1             $  12.8             $   0.5
                                           =======             =======             =======
</Table>

SAVINGS PLAN

     The Company also sponsors a savings plan through which eligible salaried
employees may elect to save a portion of their salary, and the Company matches
the first five percent of each participant's salary contributed, subject to
certain IRS limitations. Compensation expense related to this plan amounted to
$4.0, $4.6, and $4.5 respectively, for the years ended December 31, 2002, 2001,
and 2000.

BENEFITS OTHER THAN PENSION AND SAVINGS PLAN

     Substantially all of the Company's employees are covered under
postretirement life insurance and medical benefit plans that require deductible
and co-insurance payments from retirees. The postretirement life insurance
benefit formula used in the determination of postretirement benefit cost is
primarily based on applicable annual earnings at retirement for salaried
employees and specific amounts for hourly employees. The Company does not
prefund any of these postretirement benefits. Effective January 1, 1994, a
Voluntary Employee Benefit Association Trust (the "Trust") was established for
payment of health care benefits made to United Steelworkers of America retirees.
Funding of the Trust is made as claims are submitted for payment.

     Reconciliation of the postretirement benefit obligation follows:

<Table>
<Caption>
                                                      DECEMBER 1, 2001    DECEMBER 1, 2000
                                                           THROUGH             THROUGH
                                                      NOVEMBER 30, 2002   NOVEMBER 30, 2001
                                                      -----------------   -----------------
<S>                                                   <C>                 <C>
Benefit obligation at beginning of period...........       $796.6              $769.7
Service cost........................................          8.1                 7.7
Interest cost.......................................         57.8                60.1
Special termination benefits........................           --                 3.3
Actuarial loss......................................         32.2                14.4
Benefits paid.......................................        (56.0)              (58.6)
                                                           ------              ------
Benefit obligation at end of period.................       $838.7              $796.6
                                                           ======              ======
</Table>

                                       F-18
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 8--RETIREMENT BENEFITS--(CONTINUED)

     The unfunded status of the postretirement benefit obligation is as follows:

<Table>
<Caption>
                                                              DECEMBER 31,   DECEMBER 31,
                                                                  2002           2001
                                                              ------------   ------------
<S>                                                           <C>            <C>
Benefit obligation..........................................    $ 838.7       $   796.6
Fair value of assets........................................         --              --
                                                                -------       ---------
Unfunded status of plan.....................................     (838.7)         (796.6)
Unrecognized net gain.......................................      (64.6)          (98.4)
Unrecognized prior service cost.............................      (87.6)         (107.2)
                                                                -------       ---------
Accrued postretirement benefit..............................    $(990.9)      $(1,002.2)
                                                                =======       =========
</Table>

     The following weighted average assumptions were used in accounting for the
postretirement benefit plan:

<Table>
<Caption>
                                                  NOVEMBER 30,   NOVEMBER 30,   NOVEMBER 30,
                                                      2002           2001           2000
                                                  ------------   ------------   ------------
<S>                                               <C>            <C>            <C>
Discount rate...................................     7.10%          7.50%          8.00%
Rate of compensation increase...................     4.00%          4.00%          4.00%
Health care cost trend rate.....................     4.50%          4.50%          4.50%
</Table>

     The net periodic benefit cost was as follows:

<Table>
<Caption>
                                         YEAR ENDED          YEAR ENDED          YEAR ENDED
                                      DECEMBER 31, 2002   DECEMBER 31, 2001   DECEMBER 31, 2000
                                      -----------------   -----------------   -----------------
<S>                                   <C>                 <C>                 <C>
Service cost........................       $  8.1              $  7.7              $  8.3
Interest cost.......................         57.8                60.1                55.6
Amortization........................        (19.6)              (19.7)              (27.8)
Special termination benefits........           --                 3.3                 0.2
Recognized gain.....................         (1.6)               (3.1)                 --
                                           ------              ------              ------
Net periodic benefit cost...........       $ 44.7              $ 48.3              $ 36.3
                                           ======              ======              ======
</Table>

     An increase of 1% in the health care cost trend rate would increase the
benefit obligation by $106.5 and the annual net periodic cost by $9.5. A 1%
decrease would reduce the benefit obligation by $87.2 and the annual net
periodic cost by $7.7. For purposes of measuring the expected cost of benefits
covered by the plan for next year, a weighted average health care trend rate of
4.50% was assumed for 2003 and the years thereafter.

NOTE 9--INCOME TAXES

     The benefit for income taxes, excluding extraordinary items, consists of
the following:

<Table>
<Caption>
                                         YEAR ENDED          YEAR ENDED          YEAR ENDED
                                      DECEMBER 31, 2002   DECEMBER 31, 2001   DECEMBER 31, 2000
                                      -----------------   -----------------   -----------------
<S>                                   <C>                 <C>                 <C>
Current federal.....................       $ (1.8)             $ (0.6)             $(14.3)
Deferred federal....................        (14.8)              (68.9)              (11.8)
Current state.......................          0.2                 0.2                 0.2
Deferred state......................         (1.0)               (3.9)                0.4
                                           ------              ------              ------
          Total.....................       $(17.4)             $(73.2)             $(25.5)
                                           ======              ======              ======
</Table>

                                       F-19
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 9--INCOME TAXES--(CONTINUED)

     Total income taxes, excluding extraordinary items, reflected in the
Consolidated Statement of Operations differ from the amounts computed by
applying the statutory federal corporate tax rate as follows:

<Table>
<Caption>
                                         YEAR ENDED          YEAR ENDED          YEAR ENDED
                                      DECEMBER 31, 2002   DECEMBER 31, 2001   DECEMBER 31, 2000
                                      -----------------   -----------------   -----------------
<S>                                   <C>                 <C>                 <C>
Federal income tax benefit computed
  at statutory tax rate.............       $(15.3)             $(70.7)             $(20.6)
Additional tax expense (benefit)
  from:
  State and local income taxes......         (0.1)               (2.4)                0.4
  Percentage depletion..............         (2.5)               (2.7)               (4.1)
  All other, net....................          0.5                 2.6                (1.2)
                                           ------              ------              ------
          Total.....................       $(17.4)             $(73.2)             $(25.5)
                                           ======              ======              ======
</Table>

     Deferred tax assets and liabilities arise from the impact of temporary
differences between the amount of assets and liabilities recognized for
financial reporting purposes and such amounts recognized for tax purposes and
resulted from the following:

<Table>
<Caption>
                                                              DECEMBER 31,   DECEMBER 31,
                                                                  2002           2001
                                                              ------------   ------------
<S>                                                           <C>            <C>
Noncurrent deferred tax assets:
  Net operating loss ("NOL") carryforwards..................    $ 190.7        $ 143.6
  Alternative minimum tax ("AMT") credit carryforward.......         --            2.4
  Retirement benefit obligations............................      345.6          397.2
  Disallowed interest on debt to parent.....................       25.6           36.8
  Tax effect of comprehensive income items..................      275.3          132.4
                                                                -------        -------
     Total noncurrent deferred tax assets...................      837.2          712.4
Noncurrent deferred tax liabilities:
  Property, plant and equipment.............................     (486.4)        (487.6)
  Other.....................................................      (29.0)         (50.1)
                                                                -------        -------
     Net noncurrent deferred tax asset......................    $ 321.8        $ 174.7
                                                                =======        =======
Current deferred tax assets:
  Accrued vacations.........................................    $  13.1        $  12.3
  Shutdown accruals.........................................       18.6           19.5
  Property taxes............................................        1.6            2.5
  UNICAP--Inventory.........................................        6.7            2.7
  Amortization expense......................................       (4.1)          (3.1)
  Other.....................................................         --            1.3
                                                                -------        -------
     Net current deferred tax assets........................    $  35.9        $  35.2
                                                                =======        =======
</Table>

     Based on estimates of projected future taxable income, the Company believes
that it is more likely than not that the tax benefits currently generated will
be realized in future periods. Accordingly, no valuation allowance has been
established.

     At December 31, 2002, the Company had NOL carryforwards available to offset
future taxable income and AMT NOL carryforwards to offset future tax payments.
The NOL carryforwards expire as follows: $70.5 in 2019, $190.3 in 2020 and
$260.0 in 2021. The AMT NOL carryforwards expire as follows: $130.0 in 2021.

                                       F-20
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 10--RELATED PARTY TRANSACTIONS

     The Company was charged $2.1, $2.7, and $3.4 by Ispat for the years ended
December 31, 2002, 2001 and 2000, respectively, for management, financial and
legal services provided to the Company. The Company was also charged $1.4, $1.1
and $3.8 by Ispat North America Holding Inc. for corporate expense allocation
for the years ended December 31, 2002, 2001 and 2000, respectively. The Company
charged Ispat $1.6, $1.0 and $1.2 for research services for the years ended
December 31, 2002, 2001 and 2000, respectively and also charged Ispat $1.1 for
information technology services for the year ended December 31, 2000.

     The Company purchased $141.0, $49.2 and $103.2 of inventory from
subsidiaries of Ispat for the years ended December 31, 2002, 2001 and 2000,
respectively. The Company sold $7.9, $5.7 and $2.9 of inventory to subsidiaries
of Ispat for the years ended December 31, 2002, 2001 and 2000, respectively.

     The Company's long-term debt due to a related company of $824.3 and $829.7
as of December 31, 2002 and 2001, respectively, is comprised of $668.5 and
$675.5 payable to Ispat Inland Finance LLC, a wholly owned subsidiary of the
Borrower and Ispat and of $155.8 and $154.2 advances from other subsidiaries of
Ispat. Interest expense related to Ispat Inland Finance LLC debt was $41.6,
$56.5, and $65.9 for the years ended December 31, 2002, 2001 and 2000,
respectively. This debt arose in connection with the financing of the
acquisition of the Company (See Note 5). The advances from other Ispat
subsidiaries have terms of five years. Interest on each advance is charged at a
fixed rate. Rates in effect at December 31, 2002 range from 5.1% to 5.6%. At
December 31, 2002 the Company has both the ability and intent to refinance the
unpaid interest as the obligations mature, therefore it has been shown as
long-term. Interest expense related to the advances from other subsidiaries of
Ispat was $8.1 and $5.4 for the years ended December 31, 2002 and 2001,
respectively.

     The Company's note receivable from a related company of $6.1 and $2.9 as of
December 31, 2002 and 2001, respectively, is due from Ispat Inland, L.P.
Interest income on this receivable was $0.4, $0.3, and $0.6 for the years ended
December 31, 2002, 2001 and 2000, respectively. Amounts relate to costs
associated with the financing of the acquisition of the Company by Ispat and
costs incurred in relation to settlement of the interest collar (See Note 12).
Payment is due on July 16, 2006 unless Ispat Inland, L.P. chooses to prepay.

     The Company's payable to related companies of $7.8 and $12.0 at December
31, 2002 and 2001, respectively, consists of trade and other intercompany
expenses. The Company's receivable from related companies of $8.0 and $3.3 at
December 31, 2002 and 2001, respectively, consists of trade and other
intercompany receivables.

NOTE 11-- COMMITMENTS AND CONTINGENCIES

     At December 31, 2002, the Company guarantees $67.1 of long-term debt
attributable to I/N Kote (See Note 14), one of its equity investments. Since the
Company accounts for its investment in I/N Kote under the equity method, the
debt which matures on January 12, 2007 is not recorded in the Company's
consolidated balance sheet. The Company's guarantee could be invoked in an event
of default as defined in the provisions of the I/N Kote loan agreement. In
addition to III Kote Inc's 50% share of the remaining principal balance, the
Company also guarantees any outstanding interest due, both of which bear
interest at a rate equal to the higher of (1) the prescribed borrowing rate on
the loan, or (2) the Bank's (Mizuho Corporate Bank Limited) prime rate, plus 2%.
If the Company performed on its guarantee, it would continue to own its share of
I/N Kote, subject to the security interest of the Bank in the assets of I/N
Kote.

     The Company entered into an agreement (the "Agreement") with the Pension
Benefit Guaranty Corporation ("PBGC") in 1998 to provide certain financial
assurances with respect to the Company's Pension Plan. In accordance with this
Agreement, the Company provided the PBGC a letter of credit in the amount of
$160, made cash contributions of $108.6 in 2001 and $30.7 in 2000 to the Pension
Trust and committed to
                                       F-21
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 11-- COMMITMENTS AND CONTINGENCIES--(CONTINUED)

certain minimum funding requirements, including to fund normal cost of the
Pension Plan plus, through 2003, an additional $5 per year. Included in the 2001
payments was a prepayment of the entire 2002 obligation and a portion of the
2003 obligation. Accordingly, no further contribution under this Agreement was
required in 2002. The Company made a further payment of $54.5 during the first
quarter of 2003. In addition, the Company granted to the PBGC a first priority
lien on selected assets. Also, Ryerson Tull, Inc., the former parent of the
Company, was required to provide a $50 guarantee of the Company's payment
obligations with respect to its pension plan. This guarantee expires on July 16,
2003, at which time the Company is required to provide a first priority lien on
assets or a letter of credit valued at $50 as replacement security. The
Agreement with the PBGC has a term of at least five years or until certain
financial tests are met, whichever is later; however, the Agreement could
terminate within five years if the Pension Plan is terminated or the Company is
sold and the purchaser meets certain tests.

     In 1998, the Company entered into an agreement with a third party to
purchase 1.2 million tons of coke annually for approximately 15 years on a
take-or-pay basis at prices determined by certain cost factors from a heat
recovery coke battery facility located on land leased from the Company. Under a
separate tolling agreement with another third party, the Company has committed
to pay tolling charges over approximately 15 years to desulphurize flue gas from
the coke battery and to convert the heat output from the coke battery to
electrical power and steam. The Company advanced $30 during construction of the
project, which is recorded as a deferred asset on the balance sheet and will be
credited against required cash payments during the second half of the energy
tolling arrangement. As of December 31, 2002 and 2001, the estimated minimum
tolling charges remaining over the life of this agreement were approximately
$225 and $254, respectively.

     As part of the agreement covering the 1990 sale of the Inland Lime & Stone
Company division assets, the Company agreed, subject to certain exceptions, to
purchase, at prices which approximate market, the annual limestone needs of the
Indiana Harbor Works through 2002. With the completion of that agreement, the
Company is considering competitive bids for its limestone needs for 2003 and
beyond.

     On June 10, 1993, the U.S. District Court for the Northern District of
Indiana entered a consent decree that resolved all matters raised by a lawsuit
filed by the EPA in 1990 (the "Consent Decree") against, among others, Ispat
Inland Inc. The Consent Decree assessed a $3.5 cash fine, required $7 in
environmentally beneficial projects at the Indiana Harbor Works, and required
that $19, plus interest, be spent in assessing and remediating sediment in
portions of the Indiana Harbor Ship Canal and Indiana Harbor Turning Basin
("Sediment Remediation"). In addition, the Consent Decree required remediation
of the Company's Indiana Harbor Works (the "Corrective Action"). The Corrective
Action liability is a distinct and separate responsibility under the Consent
Decree. The Consent Decree establishes a three-step process for the Corrective
Action, each of which requires approval by the EPA, consisting of: (1)
assessment of the site in two separate phases (including stabilization
measures), (2) evaluation of remediation alternatives and (3) remediation of the
site where required. The Company is presently working on the assessment step of
the Corrective Action. At the completion of the second phase of assessments, the
Company will be able to estimate the required Corrective Action cleanup costs.
The Company currently expects to expend $2 to $4 per year over the next several
years to perform the required Assessments. The Company paid the $3.5 fine on
July 9, 1993 and recognized the fine in the early 1990s prior to Ispat's
acquisition In addition, pursuant to the Consent Decree, the Company completed
$14, more than the required $7, in environmentally beneficial projects at the
Indiana Harbor Works. The environmentally beneficial projects consisted of the
installation of sludge dewatering and sludge briquetting and recycling equipment
which have allowed the re-use of these former waste products into the process.
The required environmentally beneficial projects have been fully completed and
no additional beneficial projects are required. The Sediment Remediation is
currently in the assessment phase. The Company's reserve for the remaining
environmental obligations under the Consent

                                       F-22
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 11-- COMMITMENTS AND CONTINGENCIES--(CONTINUED)

Decree totaled $27.7 as of December 31, 2002, reflecting the $19 plus interest
for the Sediment Remediation liabilities, and amounts for the Corrective Action
assessments. Because the nature and extent of the contamination and the required
remedial actions cannot be determined until the first two phases of assessments
have been completed, the Company cannot presently reasonably estimate the costs
of or the time required to satisfy its Corrective Action obligations under the
Consent Decree. It is expected that assessment and remediation of the site will
require significant expenditures over the next several years that may be
material to the Company's financial position and results of operations.
Insurance coverage with respect to work required under the Consent Decree is not
significant.

     It is anticipated that the Company will make capital expenditures of $2 to
$5 annually in each of the next five years for the construction, and have
ongoing annual expenditures (non-capital) of $35 to $40 for the operation of air
and water pollution control facilities to comply with current federal, state and
local laws and regulations. The Company is involved in various environmental and
other administrative or judicial actions initiated by governmental agencies.
While it is not possible to predict the results of these matters, the Company
does not expect environmental expenditures, excluding amounts that may be
required in connection with the Consent Decree in the 1990 EPA lawsuit, to
materially affect the Company's results of operations or financial position.
Corrective actions relating to the EPA consent decree will require significant
expenditures over the next several years that may be material to the results of
operations or financial position of the Company. At December 31, 2002 and 2001,
the Company's reserves for environmental liabilities totaled $28 and $27,
respectively, $22 and $21, respectively, of which is related to the sediment
remediation under the 1993 EPA Consent Decree.

     The Company maintains reserves for costs related to various facilities that
were shut down in prior years. These reserves primarily include postretirement
benefits and other healthcare costs for employees of the closed facilities. The
Company has shutdown reserves totaling $23.0 and $25.2 as of December 31, 2002
and 2001, respectively. The reserves are classified in Other Accrued Expenses
and Other Long-term Obligations in the Consolidated Balance Sheets.

     The Company and its subsidiaries have various operating leases for which
the minimum lease payments are $14.4 in 2003, $13.6 in 2004, $11.7 in 2005, $3.2
in 2006, $1.9 in 2007 and $0.4 thereafter. Rental expense for the years ended
December 31, 2002, 2001 and 2000 was $22.8, $24.7, $31.2, respectively.

     The total amount of firm commitments of the Company and its subsidiaries to
contractors and suppliers in connection with construction projects primarily
related to additions to property, plant and equipment, was $6.9 at December 31,
2002 and $3.3 at December 31, 2001.

     In 1993, the Company established a partnership, PCI Associates, with a
subsidiary of NIPSCO, Inc to lease from General Electric Capital Corporation
certain equipment located at the Indiana Harbor Works relating to the injection
of pulverized coal into the Company's blast furnaces. The term of the lease is
18 years from the Lease Closing Date, August 31, 1993. Upon the failure of PCI
Associates, the Indiana General Partnership, to pay certain amounts due or to
perform certain duties under the PCI Lease or the insolvency of any of the
NIPSCO parties or of the Company partner, the Company will be required, so long
as it is the operator of the facility, to reimburse the lessor for certain
amounts due, or to perform such actions, under the Lease relating to its
operations. The guaranteed amounts and duties do not pertain to the base rents
due under the Lease, which are the responsibility of the NIPSCO subsidiary. The
Company could be responsible for its percentage of the liabilities, costs or
expenses associated with specified misrepresentations or covenant breaches,
discounted at 10%. The Company cannot reasonably estimate the amounts which
could be due under this guarantee, however, it is not likely that resulting
payment obligations in connection with any such

                                       F-23
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 11-- COMMITMENTS AND CONTINGENCIES--(CONTINUED)

arrangements could materially affect the financial condition or results of
operations of the Company. The Company has not recognized any liability
associated with this guarantee.

     The Company and an independent, unaffiliated producer of raw materials are
parties to a long-term supply agreement under which the Company was obligated to
fund an escrow account to indemnify said producer of raw materials for the
continuing availability of certain tax credits under the US Tax code, which
credits extend until January 1, 2008. Contributions to the escrow were
determined by the agreement and the funds were restricted from Company use while
in the escrow. The Company received full recovery of $39.1, the escrowed amount,
in April of 2001. No further contributions to the escrow are required at this
time as the Company believes the likelihood of the specific contingency
occurring is remote. If there is any loss, disallowance or reduction in the
allowable tax credits applicable to the raw materials previously sold to the
Company, the Company is required to repay the independent, unaffiliated producer
the amount by which the cost of the raw materials was decreased as a result of
such tax credits, subject to certain adjustments, plus interest. As of December
31, 2002, the Company's cumulative cost reduction due to such tax credits
totaled $129.2. The current carrying amount of this indemnification is $0.

     The office of the United States Attorney for the Middle District of
Louisiana ("the U.S. Attorney") had informed the Company that it was a target of
a federal criminal grand jury investigation and one of several defendants in a
civil qui tam lawsuit filed by a private individual on behalf of the government,
alleging violations of the False Claims Act, 31 U.S.C. Section 3729, et seq. The
investigation and the lawsuit related to the sale of polymer coated steel by the
Company to a culvert fabricator for use in federal and state highway
construction projects in Louisiana. Since being notified of the lawsuit and
investigation, Ispat and the Company have provided their complete cooperation
with investigators. On January 17, 2001, to fully resolve this matter, the
Company agreed to a settlement of $15.5 million, which is half of the total
settlement among the United States, the state of Louisiana, the relators, and
the defendants.

     The settlement was approved by the U.S. District Court in Baton Rouge,
Louisiana and paid by the Company in January 2001. All the allegations by the
U.S. Attorney related to events that occurred prior to the May 27, 1998
execution of the Merger Agreement among Ispat, the Company, Inland Merger Sub,
Inc. and Inland Steel Industries, Inc. (the predecessor company to Ryerson Tull,
Inc.), as amended. On May 29, 2001, the Company settled a number of disputes
with Ryerson Tull, Inc. that had arisen under the May 27, 1998 Merger Agreement,
as amended. The settled disputes included the Company's claim against Ryerson
Tull for indemnification in connection with the resolution of the federal
lawsuit and investigation, but excluded environmental claims, for which the
Company may make claims until July 2003. Pursuant to the May 29, 2001
settlement, Ryerson Tull paid $7.5 to the Company and the parties released
certain claims each had against the other.

     In October 1996, the Indiana Department of Environmental Management, as
lead administrative trustee, notified the Company and other potentially
responsible parties that the natural resource trustees (which also include the
Indiana Department of Natural Resources, the U.S. Department of the Interior,
the Fish and Wildlife Service and the National Park Service) intend to perform a
natural resource damage assessment on the Grand Calumet River and Indiana Harbor
Canal System. The notice states that the Company has been identified as a
potentially responsible party due to alleged releases of hazardous substances
from its Indiana Harbor Works facility. Ispat and the Company have notified
Ryerson Tull, Inc. of their intention to seek indemnification and other remedies
under the May 27, 1998 Merger Agreement among Ispat, the Company, Inland Merger
Sub, Inc. and Inland Steel Industries, Inc. (the predecessor company to Ryerson
Tull, Inc.), as amended, and on other grounds, for any losses in connection with
this matter. At this time, it is not possible to accurately predict the amount
of the Company's potential liability or whether this potential liability could
materially affect the financial position of the Company.
                                       F-24
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 11-- COMMITMENTS AND CONTINGENCIES--(CONTINUED)

     The U.S. Comprehensive Environmental Response, Compensation, and Liability
Act, also known as Superfund, and analogous state laws can impose liability for
the entire cost of cleanup at a site upon any of the current or former owners or
operators or parties who sent waste to the site, regardless of fault or the
lawfulness of the activity that caused the contamination. The Company is a
potentially responsible party at several state and federal Superfund sites.
Except for the Four County Landfill described below, the Company believes its
liability at these sites is either de minimis or substantially resolved. The
Company could, however, incur additional costs or liabilities at these sites if
additional cleanup is required, private parties sue for personal injury or
property damage, or other responsible parties sue for reimbursement of costs
incurred to clean up the sites. The Company could also be named a potentially
responsible party at other sites if its wastes or its predecessor's generated
wastes were disposed of at a site that later became a Superfund site.

     The Company received a Special Notice of Potential Liability from the
Indiana Department of Environmental Management (IDEM) on February 18, 1992
relating to releases of hazardous substances from the Four County Landfill Site
in Fulton County, Indiana. The Company, along with other potentially responsible
parties (PRP's), has entered into two agreed orders with IDEM pursuant to which
the PRP's agreed to perform a remedial investigation and feasibility study for
the site, pay certain past and future IDEM costs and provide funds for operation
and maintenance necessary for stabilization of the First Operable Unit of the
site. The remedial investigation and feasibility study work is complete. With
respect to the cost of the remaining work on the First Operable Unit, IDEM's
most current estimate is $0.7. Under the terms of the PRP agreement, the Company
has an approximate 7.2% share.

     In July 2001, IDEM selected the remedy for the Second Operable Unit at the
Four County Landfill. The Company is a member of a group that is negotiating
with IDEM to resolve any liability for the Second Operable Unit as well as
remaining obligations with regard to the First Operable Unit. IDEM has estimated
the costs for the Second Operable Unit to be approximately $1.0, with an
additional contingent remedy estimated to cost approximately $2.1, to be
implemented only if the selected remedy is deemed to be inadequate. The Company
presently intends to participate in the settlement that is being negotiated at a
level that is consistent with its participation in the PRP Agreement for the
First Operable Unit, which would reflect, at a maximum, approximately $0.2. IDEM
has a trust account holding approximately $0.8 for use in the implementation of
the First and Second Operable Unit remedies.

     In July 2001, the United States Environmental Protection Agency (EPA) filed
suit against the Company and other PRP's, seeking recovery of past response
costs which it alleged it has expended at the Four County Landfill Site. The
Company believes that this matter will not have a material effect on the
financial position of the Company.

     On July 2, 2002, the Company received a notice of violation ("NOV") issued
by the US Environmental Protection Agency against the Company, Indiana Harbor
Coke Company, L.P. ("IHCC") and Cokenergy, Inc., alleging violations of air
quality and permitting regulations for emissions from the Heat Recovery Coal
Carbonization facility which is operated by IHCC. An amended NOV stating similar
allegations was issued on August 8, 2002. Ispat and the Company have notified
Ryerson Tull, Inc. of their intention to seek indemnification and other remedies
under the May 27, 1998 Merger Agreement among Ispat, the Company, Inland Merger
Sub, Inc. and Inland Steel Industries, Inc. (the predecessor company to Ryerson
Tull, Inc.), as amended, and other grounds, for any losses in connection with
this matter. At this time, it is not possible to predict whether the Company
will be found liable for any violation and, if, in fact, there were to be such a
finding, the amount of the Company's potential liability or whether this
potential liability could materially affect the financial position of the
Company.

                                       F-25
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 11-- COMMITMENTS AND CONTINGENCIES--(CONTINUED)

     In addition to the foregoing, the Company is a party to a number of legal
proceedings arising in the ordinary course of our business. The Company does not
believe that the adverse determination of any such pending routine litigation,
either individually or in the aggregate, will have a material adverse effect on
the financial condition, results of operations or cash flows of the Company.

NOTE 12--DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value.

DERIVATIVES

     The Company uses futures and swap contracts to manage fluctuations in the
cost of natural gas and certain nonferrous metals, primarily zinc which is used
in the coating of steel. Timing of these transactions corresponds to the
expected need for the underlying physical commodity and is intended as a hedge
(not as defined by SFAS No. 133) against the cost volatility of these
commodities. The counterparties to these contracts are internationally
recognized companies which are not considered a credit risk by the Company.
Contracts generally do not extend out beyond two years. At December 31, 2002 and
2001, the Company had entered into contracts for these commodities for notional
amounts of $14.9 and $18.0, respectively, which had fair values of $1.6 and
$2.8, respectively. For the twelve months ended December 31, 2002 and 2001, the
Company recorded a gain of $1.2 and a loss of $2.8, respectively, for changes in
the fair value of derivative instruments not designated as a hedge (as defined
by SFAS No. 133). Under terms of the futures and swap contracts, the Company had
approximately $0.9 and $1.0 on deposit with counterparties at December 31, 2002
and 2001, respectively, that was classified as an other asset on the balance
sheet.

     A portion of the floating rate debt used in connection with the financing
of the acquisition of the Company was hedged by the Borrower through the use of
an interest collar (see Note 5 and Note 10). Due to the decline in interest
rates during fiscal years 2002 and 2001, the fair value of the collar
represented a derivative liability to the Borrower of approximately $13.7 at
December 31, 2002 and $13.0 at December 31, 2001, respectively.

LONG-TERM DEBT

     The estimated fair value of the Company's long-term debt (including current
portions thereof), using quoted market prices of Company debt securities
recently traded and market-based prices of similar securities for those
securities not recently traded, was $916 and $821 at December 31, 2002 and 2001,
respectively, as compared with the carrying value of $1,249 and $1,254 in the
balance sheets at December 31, 2002 and 2001, respectively.

NOTE 13--I/N TEK AND I/N KOTE JOINT VENTURES

     I/N Tek, a general partnership formed for a joint venture between the
Company and Nippon Steel Corporation ("NSC"), owns and operates a cold-rolling
facility. I/N Tek is 60% owned by a wholly owned subsidiary of the Company and
40% owned by an indirect wholly owned subsidiary of NSC. The Company has rights
to the productive capacity of the facility, except in certain limited
circumstances and, under a tolling arrangement with I/N Tek, has an obligation
to use the facility for the production of cold rolled steel. Under the tolling
arrangement, the Company was charged $141.6, $142.8 and $146.1 for such tolling
services for the years ended December 31, 2002, 2001 and 2000, respectively.

                                       F-26
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 13--I/N TEK AND I/N KOTE JOINT VENTURES--(CONTINUED)

     The Company and NSC also own and operate another joint venture which
consists of a 500,000 ton electrogalvanizing line and a 500,000 ton hot-dip
galvanizing line adjacent to the I/N Tek facility. I/N Kote, the general
partnership formed for this joint venture, is owned 50% by a wholly owned
subsidiary of the Company and 50% by an indirect wholly owned subsidiary of NSC.
The Company and NSC each has guaranteed the share of long-term financing
attributable to their respective subsidiary's interest in the partnership. I/N
Kote had $134 and $176 outstanding under its long-term financing agreement at
December 31, 2002 and 2001, respectively. I/N Kote is required to buy all of its
cold rolled steel from the Company, which is required to furnish such cold
rolled steel at a price that results in an annual return on equity to the
partners of I/N Kote, depending upon operating levels, of up to 10% after
operating and financing costs. This price may be subject to an adjustment
("return on sales adjustment" or "ROS adjustment") if the Company's return on
sales ("ROS") differs from I/N Kote's ROS, as defined in the Substrate Supply
Agreement. The Company recorded sales of cold rolled steel to I/N Kote of
$348.8, $309.7, and $343.1 for the years ended December 31, 2002, 2001 and 2000,
respectively. At December 31, 2002 and 2001, I/N Kote owed the Company $42.5 and
$18.8, respectively, related to these purchases. Prices of cold rolled steel
sold by the Company to I/N Kote are determined pursuant to the terms of the
joint venture agreement and are based, in part, on operating costs of the
partnership. In 2002, 2001 and 2000, the Company sold cold rolled steel to I/N
Kote at prices that exceeded the Company's production costs but were less than
the market prices for cold rolled steel products. I/N Kote also provides tolling
services to the Company for which it was charged $0.0, $0.0, and $1.5 for the
years ended December 31, 2002, 2001 and 2000, respectively. The Company sells
all I/N Kote products that are distributed in North America. The Company
receives a 1% sales commission on I/N Kote sales for which it earned $5.2, $4.9,
and $5.6 for the years ended December 31, 2002, 2001 and 2000, respectively.

     During 2002, 2001 and 2000, certain conditions (as defined in the Substrate
Supply Agreement) were met resulting in ROS adjustment being realized by the
Company. The Company's consolidated financial statements reflect a net
adjustment of approximately $1.6, $20.6 and $5.2 for the years ended December
31, 2002, 2001 and 2000, respectively. The adjustment increases the aggregate
substrate price for 2002, 2001 and 2000 which results in the Company's return on
sales being equal to the return on sales of I/N Kote. As the ROS is essentially
funded by the joint venture partners, to the extent the ROS exceeds the return
of capital and annual equity return of the partners, the partners are required
to contribute additional capital through cash payments. Therefore, the Company
recorded a payable to I/N Kote of approximately $13.0 to fund their portion of
the ROS in 2001. As further outlined in the Substrate Supply Agreement, the
component of any ROS adjustment which results in negative ROS for I/N Kote will
be returned to the Company and NSC in an amount prescribed by a formula in the
Substrate Supply Agreement if the Company's ROS is greater than I/N Kote's ROS
in subsequent years.

     During the development of the I/N Tek and I/N Kote joint ventures and to
meet ongoing capital needs, the Company has loaned money to the joint ventures.
These partner loans are included in "Investments in and advances to joint
ventures" in the balance sheet. The outstanding balance of the I/N Tek partner
loans was $17.8 and $16.9 at December 31, 2002 and 2001, respectively. The
Company recorded interest income related to the I/N Tek loans of $1.1, $1.3, and
$1.4 for the years ended December 31, 2002, 2001 and 2000, respectively. The
outstanding balance of the I/N Kote partner loans was $33.7 and $36.2 at
December 31, 2002 and 2001, respectively. The Company recorded interest income
on the I/N Kote loans of $1.2, $3.3, and $3.4 for the years ended December 31,
2002, 2001 and 2000, respectively. In the fourth quarter of 2002, the terms of
each of the I/N Tek and I/N Kote partnerships were extended through December 31,
2021.

     Related to the I/N Tek and I/N Kote joint ventures, the Company owned
common stock of NSC. The NSC stock was sold during the first quarter of 2001 at
a loss of $0.5. Fair value was determined based on

                                       F-27
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 13--I/N TEK AND I/N KOTE JOINT VENTURES--(CONTINUED)

quoted market price. Differences between recorded value and fair value were
recorded net of tax to Other Comprehensive Income.

NOTE 14--INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

     The Company's investments in unconsolidated joint ventures accounted for by
the equity method consist primarily of its 60% interest in I/N Tek, 50% interest
in I/N Kote, 50% interest in PCI Associates and 21% interest in the Empire Iron
Mining Partnership ("Empire")(See Note 17). I/N Tek and I/N Kote are joint
ventures with NSC (see Note 13). The Company does not exercise control over I/N
Tek, as all significant management decisions of the joint venture require
agreement by both of the partners. Due to this lack of control by the Company,
the Company accounts for its investment in I/N Tek under the equity method. PCI
Associates is a joint venture which operates a pulverized coal injection
facility at the Indiana Harbor Works. Empire is an iron ore mining and
pelletizing venture owned in various percentages by the Company and an Iron Ore
manufacturer. As of December 31, 2002, 2001 and 2000, the Company included
additional minimum pension liabilities relating to the unconsolidated joint
ventures in the amount of $4.8 $8.9 and $0.5, respectively (net of tax effects
of $2.7, $5.0 and $0.3 respectively) in Accumulated Other Comprehensive Loss on
the Consolidated Balance Sheet.

     Following is a summary of combined financial information of the Company's
unconsolidated joint ventures:

<Table>
<Caption>
                                                                2002       2001
                                                              --------   --------
<S>                                                           <C>        <C>
Results of operations for the year ended December 31:
  Gross revenue.............................................  $  838.9   $  888.1
  Costs and expenses........................................     804.4      856.2
                                                              --------   --------
  Net income................................................  $   34.5   $   31.9
                                                              ========   ========
Financial position at December 31:
  Current assets............................................  $  227.8   $  224.7
  Total assets..............................................   1,078.6    1,138.0
  Current liabilities.......................................     220.3      219.5
  Total liabilities.........................................     752.3      755.4
  Net assets................................................     326.3      382.6
</Table>

NOTE 15--WORKFORCE REDUCTION

     For the year ended December 31, 2001, the Company recorded charges of $18.2
for severance and termination benefit cost related to voluntary and involuntary
workforce reductions of approximately 250 salaried non-represented employees. Of
the amounts recorded, $11.1 was included in deferred employee benefits and $6.3
was paid by the Company for the 2001 workforce reductions during 2001. In
addition, the Company paid $4.1 related to the 2000 workforce reduction during
2001. For the year ended December 31, 2002, the Company paid $0.2 related to the
2001 workforce provisions and reversed the remaining $0.6 due to changes from
previous estimates.

                                       F-28
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 16--SALE OF POLLUTION ALLOWANCES

     In December of 2001, the Company sold 1,368 tons of Nitrous Oxide ("NOx")
allowances to a utility company for $18.1 which was recorded in "Other (Income)
Expense, net". NOx allowances sold were part of an overall bank of emission
allowances and credits (collectively, "rights") owned by the Company. Generally,
these rights arose from actions taken by the Company or the state to reduce the
emission of air pollutants. As the Company evaluates its future development
plans and contemporaneous environmental regulation, it may from time to time,
determine that additional rights are surplus to its operations. If determined to
be surplus, the Company will seek to liquidate these surplus assets.

NOTE 17--IMPAIRMENT OF ASSETS

     As outlined in SFAS No. 144, an impairment loss shall be recognized when
the carrying amount of a long-lived asset is not recoverable and exceeds its
fair value. The carrying amount of a long-lived asset is not recoverable if it
exceeds the expected sum of the undiscounted cash flows over its remaining
useful life. Based on this criteria, the Company concluded that 2A Bloomer and
21" Rolling Mill were impaired.

     In the Fourth Quarter of 2001, the Company temporarily idled its 2A Bloomer
and 21" Rolling Mill due to deteriorating market conditions. The market has not
sufficiently improved and could become even more onerous with the announced
purchase of a competitor's facility previously idled due to the prior owner's
bankruptcy. Employing a present value technique to determine the fair value of
these assets, the Company recorded an impairment charge of $23 at December 31,
2002.

     In addition, the Company evaluated its investment in Empire Mine, which is
accounted for under the equity method, in accordance with Accounting Principles
Board (APB) No. 18, "The Equity Method of Accounting for Investments in Common
Stock". APB No. 18 requires that a loss in value of the investment that is other
than a temporary decline should be recognized in the same manner as a loss in
value of other long-lived assets. During the fourth quarter of 2002, the Company
identified conditions, including projected operating losses due to increasing
costs and a reduction in iron ore reserves, indicating that a permanent loss in
the value of the investment had occurred. As a result, the Company recorded a
$39 impairment charge for its Empire Mine investment and related fluxing
equipment. To determine the fair value of its Empire investment, the Company
considered the sale of a partial ownership interest in the Empire Mine in
conjunction with a separate 12 year Purchase agreement which were concluded on
December 31, 2002.

NOTE 18-- ASSET RETIREMENT OBLIGATIONS

     The Company will adopt the provisions of SFAS No. 143 for the quarter ended
March 31, 2003. Based on analysis the Company has performed, it has been
determined that the only asset for which an asset retirement obligation must be
recorded is the Company's Minorca Mine. The Minorca Mine through the
Environmental Impact Statement (EIS) process does have a reclamation plan on
file with the state of Minnesota. Each year the Minorca Mine is required by the
Minnesota Department of Natural Resources (MDNR) to submit an annual mining and
reclamation summary for the year just completed and to provide mining and
reclamation plans for the coming year. When possible the Minorca Mine reclaims
abandoned areas on a yearly basis. By doing this, the mine keeps up with the
reclamation to avoid a huge cost at the end of the mine life. Each fall the MDNR
conducts a field review of prior reclamation work, to point out deficiencies
that need to be corrected. A complete environmental site assessment was done in
1996. The Minnesota Pollution Control Agency conducted a multi-media inspection
of the entire property with no violations. Currently, Ispat Inland Mining
Company is in compliance with all environmental standards and therefore, the
Company expects little or no environmental remediation at the time of closure of
the mine. As of December 31, 2002, the estimated total future reclamation costs
are $18.2 with an estimated potential reserve of 43,000,000 gross tons of
pellets.
                                       F-29
<PAGE>
                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
             (Dollars in Millions except share and per share data)

NOTE 19-- BUSINESS SEGMENTS AND CONCENTRATION OF RISKS

     The Company and its subsidiaries operate in a single business segment,
which comprises the operating companies and divisions involved in the
manufacturing of basic steel products and related raw material operations.

     The Company both produces and sells a wide range of steels, of which
approximately 99% consists of carbon and high-strength low-alloy steel grades.
For the years ended December 31, 2002, 2001 and 2000, approximately 74%, 73%,
and 79% of the sales were to customers in five mid-American states,
respectively, and 93%, 90%, and 93% were to customers in 20 mid-American states.
Over half the sales are to the steel service center and transportation
(including automotive) markets.

     Sales to Ryerson Tull, Inc. approximated 9%, 10%, and 10% of consolidated
net sales in the years ended December 31, 2002, 2001 and 2000. No other
customer, except I/N Kote (see Note 13), accounted for more than 10% of the
consolidated net sales of the Company during the noted periods.

     As of December 31, 2002 approximately 77% of the active workforce was
represented by the United Steelworkers of America ("USWA"). The existing labor
contract between the USWA and the Company expires July 31, 2004.

NOTE 20-- CONSOLIDATED QUARTERLY SALES AND EARNINGS (UNAUDITED)

<Table>
<Caption>
                                                                     2002
                                                     -------------------------------------
                                                      FIRST    SECOND     THIRD    FOURTH
                                                     QUARTER   QUARTER   QUARTER   QUARTER
                                                     -------   -------   -------   -------
<S>                                                  <C>       <C>       <C>       <C>
Net sales..........................................  $532.0    $589.0    $597.3    $585.1
Operating profit (loss)............................    (8.9)     18.2      39.7     (16.0)
Net income (loss)..................................    (7.7)     10.7      13.0     (23.1)
</Table>

<Table>
<Caption>
                                                                     2001
                                                     -------------------------------------
                                                      FIRST    SECOND     THIRD    FOURTH
                                                     QUARTER   QUARTER   QUARTER   QUARTER
                                                     -------   -------   -------   -------
<S>                                                  <C>       <C>       <C>       <C>
Net sales..........................................  $529.9    $520.5    $489.0    $544.7
Operating loss.....................................   (70.9)     (8.6)    (22.3)    (25.8)
Net loss...........................................   (60.0)    (17.7)    (30.1)    (18.2)
</Table>

<Table>
<Caption>
                                                                     2000
                                                     -------------------------------------
                                                      FIRST    SECOND     THIRD    FOURTH
                                                     QUARTER   QUARTER   QUARTER   QUARTER
                                                     -------   -------   -------   -------
<S>                                                  <C>       <C>       <C>       <C>
Net sales..........................................  $638.0    $630.1    $567.7    $547.8
Operating profit (loss)............................    34.6      27.7      10.6     (37.1)
Net income (loss)..................................     8.5       3.9     (10.2)    (35.1)
</Table>

                                       F-30
<PAGE>

                   ISPAT INLAND INC. AND SUBSIDIARY COMPANIES

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
             (Dollars in Millions except share and per share data)

<Table>
<Caption>
                                                   PROVISION FOR ALLOWANCES, CLAIMS AND DOUBTFUL ACCOUNTS
                                                   -------------------------------------------------------
                                                    BALANCE AT      ADDITIONS    DEDUCTIONS    BALANCE AT
                                                   BEGINNING OF    CHARGED TO       FROM         END OF
                                                      PERIOD         INCOME       RESERVES       PERIOD
                                                   -------------   -----------   -----------   -----------
<S>                                                <C>             <C>           <C>           <C>
January 1, 2002 through December 31, 2002........      $16.7          $0.6          $0.3          $17.0
January 1, 2001 through December 31, 2001........       17.0            --           0.3           16.7
January 1, 2000 through December 31, 2000........       18.6           0.1           1.7           17.0
</Table>

<Table>
<Caption>
                                                                 RESTRUCTURING RESERVE
                                                 -----------------------------------------------------
                                                  BALANCE AT    ADDITIONS      DEDUCTIONS   BALANCE AT
                                                 BEGINNING OF   CHARGED TO        FROM        END OF
                                                    PERIOD        INCOME        RESERVES      PERIOD
                                                 ------------   ----------     ----------   ----------
<S>                                              <C>            <C>            <C>          <C>
January 1, 2002 through December 31, 2002......      $0.8         $(0.6)(A)     $0.2(A)        $ --
January 1, 2001 through December 31, 2001......       4.1           7.1(A)      10.4(A)         0.8
January 1, 2000 through December 31, 2000......       6.1           4.1(A)       6.1(A)         4.1
</Table>

---------------

NOTES:
(A) Workforce reduction costs.

<Table>
<Caption>
                                                                    SHUTDOWN RESERVES
                                                   ---------------------------------------------------
                                                    BALANCE AT    ADDITIONS    DEDUCTIONS   BALANCE AT
                                                   BEGINNING OF   CHARGED TO      FROM        END OF
                                                      PERIOD        INCOME      RESERVES      PERIOD
                                                   ------------   ----------   ----------   ----------
<S>                                                <C>            <C>          <C>          <C>
January 1, 2002 through December 31, 2002........     $25.2           --          $2.2        $23.0
January 1, 2001 through December 31, 2001........      26.4           --           1.2         25.2
January 1, 2000 through December 31, 2000........      27.4           --           1.0         26.4
</Table>

                                       F-31
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                          ISPAT INLAND INC.

                                          By:    /s/ PETER D. SOUTHWICK
                                            ------------------------------------
                                                     Peter D. Southwick
                                               President and Chief Executive
                                                           Officer
                                               (Principal Executive Officer)

March 31, 2003

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.

<Table>
<Caption>
                   SIGNATURE                                     TITLE                       DATE
                   ---------                       ----------------------------------   --------------
<S>                                                <C>                                  <C>



             /s/ PETER D. SOUTHWICK                  President and Chief Executive      March 31, 2003
------------------------------------------------                Officer
               Peter D. Southwick                    (Principal Executive Officer)
                                                              and Director




             /s/ MICHAEL G. RIPPEY                  Executive Vice President-Sales,     March 31, 2003
------------------------------------------------   Finance & Administration and Chief
               Michael G. Rippey                           Financial Officer
                                                     (Principal Financial Officer)
                                                     (Principal Accounting Officer)
                                                              and Director




                                                                Director
------------------------------------------------
               Lakshmi N. Mittal




                                                                Director
------------------------------------------------
               Robert B. McKersie




                                                                Director
------------------------------------------------
                 Malay Mukerjee




                                                                Director
------------------------------------------------
                Richard Leblanc




                                                                Director
------------------------------------------------
                Ashok L. Aranha




                                                                Director
------------------------------------------------
               Jean-Pierre Picard
</Table>

                                          By:       /s/ MARC R. JESKE
                                            ------------------------------------
                                                       Marc R. Jeske
                                                      Attorney-in-fact

March 31, 2003
<PAGE>

                                 CERTIFICATION

           PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Peter D. Southwick, certify that:

     1) I have reviewed this annual report on Form 10-K of Ispat Inland Inc.

     2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

     3) Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

     4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a) designed such disclosure controls and procedures to ensure that
     material information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this annual report is being
     prepared;

          b) evaluated the effectiveness of the registrant's disclosure controls
     and procedures as of a date within 90 days prior to the filing date of this
     annual report (the "Evaluation Date"); and

          c) presented in this annual report our conclusions about the
     effectiveness of the disclosure controls and procedures based on our
     evaluation as of the Evaluation Date;

     5) The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

          a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

          b) any fraud, whether or not material, that involves management or
     other employees who have a significant role in the registrant's internal
     controls; and

     6) The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

                                                /s/ PETER D. SOUTHWICK
                                          --------------------------------------
                                          Name: Peter D. Southwick
                                          Title: President & Chief Executive
                                          Officer
Date: March 31, 2003
<PAGE>

                                 CERTIFICATION

           PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael G. Rippey, certify that:

     1) I have reviewed this annual report on Form 10-K of Ispat Inland Inc.

     2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

     3) Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

     4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a) designed such disclosure controls and procedures to ensure that
     material information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this annual report is being
     prepared;

          b) evaluated the effectiveness of the registrant's disclosure controls
     and procedures as of a date within 90 days prior to the filing date of this
     annual report (the "Evaluation Date"); and

          c) presented in this annual report our conclusions about the
     effectiveness of the disclosure controls and procedures based on our
     evaluation as of the Evaluation Date;

     5) The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

          a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

          b) any fraud, whether or not material, that involves management or
     other employees who have a significant role in the registrant's internal
     controls; and

     6) The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

                                                 /s/ MICHAEL G. RIPPEY
                                          --------------------------------------
                                          Name: Michael G. Rippey
                                          Title: Executive Vice President,
                                          Sales, Finance & Administration and
                                          Chief Financial Officer

Date: March 31, 2003
<PAGE>

                               INDEX TO EXHIBITS

<Table>
<C>       <S>
  2.(i)   Agreement and Plan of Merger, dated May 27, 1998, among
          Ispat International N.V., Inland Merger Sub, Inc., Inland
          Steel Industries, Inc. and Inland Steel Company. (Field as
          Exhibit 2.1 to the Company's Current Report on Form 8-K
          filed on June 9, 1998, and incorporated by reference
          herein.)

  2.(ii)  Amendment to Agreement and Plan of Merger, dated July 16,
          1998, between Ispat International N.V., Inland Steel
          Industries, Inc., Inland Merger Sub, Inc. and Inland Steel
          Company. (Filed as Exhibit 2.2 to Inland Steel Industries,
          Inc. Current Report on Form 8-K filed on July 20, 1998, and
          incorporated by reference herein.)

  3.A     Copy of Restated Certificate of Incorporation of the
          Company. (Filed as Exhibit 3.(i) to the Company's Quarterly
          Report for the quarter ended September 30, 1998, and
          incorporated by reference herein.)

  3.B     Copy of By-Laws, as amended, of the Company. (Filed as
          Exhibit 3.(ii) to the Company's Quarterly Report for the
          quarter ended June 30, 1998, and incorporated by reference
          herein.)

  3.C     Corrected Certificate of the Designations, Powers,
          Preferences and Relative, Participating or Other Rights, and
          the Qualifications, Limitations or Restrictions thereof, of
          Series A 8% Preferred Stock of Ispat Inland Inc., filed
          January 3, 2000. (Filed as Exhibit 3.C to the Company's
          Annual Report on Form 10-K for the year ended December 31,
          1999, and incorporated by reference herein.)

  4.A     Copy of First Mortgage Indenture, dated April 1, 1928,
          between the Company (the "Steel Company") and First Trust
          and Savings Bank and Melvin A. Traylor, as Trustees, and of
          supplemental indentures thereto, to and including the
          Thirty-Fifth Supplemental Indenture, incorporated by
          reference from the following Exhibits: (i) Exhibits B-1(a),
          B-1(b), B-1(c),B-1(d) and B-1(e), filed with Steel Company's
          Registration Statement on Form A-2 (No. 2-1855); (ii)
          Exhibits D-1(f) and D-1(g), filed with Steel Company's
          Registration Statement on Form E-1 (No. 2-2182); (iii)
          Exhibit B-1(h), filed with Steel Company's Current Report on
          Form 8-K dated January 18, 1937; (iv) Exhibit B-1(i), filed
          with Steel Company's Current Report on Form 8-K, dated
          February 8, 1937; (v) Exhibits B-1(j) and B-1(k), filed with
          Steel Company's Current Report on Form 8-K for the month of
          April, 1940; (vi) Exhibit B-2, filed with Steel Company's
          Registration Statement on Form A-2 (No. 2-4357); (vii)
          Exhibit B-1(l), filed with Steel Company's Current Report on
          Form 8-K for the month of January, 1945; (viii) Exhibit 1,
          filed with Steel Company's Current Report on Form 8-K for
          the month of November, 1946; (ix) Exhibit 1, filed with
          Steel Company's Current Report on Form 8-K for the months of
          July and August, 1948; (x) Exhibits B and C, filed with
          Steel Company's Current Report on Form 8-K for the month of
          March, 1952; (xi) Exhibit A, filed with Steel Company's
          Current Report on Form 8-K for the month of July, 1956;
          (xii) Exhibit A, filed with Steel Company's Current Report
          on Form 8-K for the month of July, 1957; (xiii) Exhibit B,
          filed with Steel Company's Current Report on Form 8-K for
          the month of January, 1959; (xiv) the Exhibit filed with
          Steel Company's Current Report on Form 8-K for the month of
          December, 1967; (xv) the Exhibit filed with Steel Company's
          Current Report on Form 8-K for the month of April, 1969;
          (xvi) the Exhibit filed with Steel Company's Current Report
          on Form 8-K for the month of July, 1970; (xvii) the Exhibit
          filed with the amendment on Form 8 to Steel Company's
          Current Report on Form 8-K for the month of April, 1974;
          (xviii) Exhibit B, filed with Steel Company's Current Report
          on Form 8-K for the month of September, 1975; (xix) Exhibit
          B, filed with Steel Company's Current Report on Form 8-K for
          the month of January, 1977; (xx) Exhibit C, filed with Steel
          Company's Current Report on Form 8-K for the month of
          February, 1977; (xxi) Exhibit B, filed with Steel Company's
          Quarterly Report on Form 10-Q for the quarter ended June 30,
          1978; (xxii) Exhibit B, filed with Steel Company's Quarterly
          Report on Form 10-Q for the quarter ended June 30, 1980;
          (xxiii) Exhibit 4-D, filed with Steel Company's Annual
          Report on Form 10-K for the fiscal year ended December 31,
          1980; (xxiv) Exhibit 4-D, filed with Steel Company's Annual
          Report on Form 10-K for the fiscal year ended December 31,
          1982; (xxv) Exhibit 4-E, filed with Steel Company's Annual
          Report on Form 10-K for the fiscal year ended December 31,
          1983; (xxvi) Exhibit 4(i) filed with the Steel Company's
          Registration Statement on Form S-2 (No. 33-43393); (xxvii)
          Exhibit 4 filed with Steel Company's Current Report on Form
          8-K dated June 23, 1993; (xxviii) Exhibit 4.C filed with
          Steel Company's Quarterly Report on Form 10-Q for the
          quarter ended June 30, 1995; (xxix) Exhibit 4.C filed with
          Steel Company's Quarterly Report on Form 10-Q for the
          quarter Ended September 30, 1995, and (xxx) Exhibit 4.C
          filed with Steel Company's Quarterly Report on Form 10-Q for
          the quarter ended June 30, 1996.
</Table>

                                        i
<PAGE>
<Table>
<C>       <S>

  4.B     Copy of consolidated reprint of First Mortgage Indenture,
          dated April 1, 1928, between the Company and First Trust and
          Savings Bank and Melvin A. Traylor, as Trustees, as Amended
          and supplemented by all supplemental indentures thereto, to
          and including the Thirteenth Supplemental Indenture. (Filed
          as Exhibit 4-E to Form S-1 Registration Statement No.
          2-9443, and incorporated by reference herein.)

  4.C     Copy of Thirty-Sixth Supplemental Indenture dated as of July
          16, 1998 from Inland Steel Company to First National Bank
          and John G. Finely as Trustees to the First Mortgage
          Indenture dated April 1, 1928, between Inland Steel Company
          and First Trust and Savings Bank and Melvin A. Taylor, as
          Trustees (filed as Exhibit 4.C to the Company's Annual
          Report on Form 10-K for the fiscal year ended December 31,
          1998, and incorporated by reference herein.

 10.A     Credit Agreement dated as of July 16, 1998, among Ispat
          Inland L.P., Inland Steel Company, Burnham Trucking Company,
          Inc., Incoal Company and Credit Suisse First Boston. (Filed
          as Exhibit 10 to the Company's Annual Report on Form 10-K
          for the fiscal year ended December 31, 1998, and
          incorporated by reference herein.)

 10.B     Amendment No. 1 to the Credit Agreement dated as of
          September 30, 1999, to the Credit Agreement dated as of July
          16, 1998, among Ispat Inland L.P., Inland Steel Company,
          Burnham Trucking Company, Inc., Incoal Company and Credit
          Suisse First Boston. (Filed as Exhibit 10.A to the Company's
          Annual Report on Form 10-K for the year ended December 31,
          1999, and incorporated as reference herein.)

 16       Letter dated August 25, 1998 from Pricewaterhouse Coopers
          LLP regarding change in certifying accountant. (Filed
          Exhibit 16.1 to the Company's Current Report on Form 8-K
          filed on August 28, 1998, and incorporated by reference
          herein).

 24       Powers of Attorney.

 99.1     Certification of Peter D. Southwick, President & Chief
          Operating Officer of Ispat Inland Inc. Pursuant to 18 U.S.C.
          Section 1350, as Adopted Pursuant to Section 906 of the
          Sarbanes-Oxley Act of 2002.

 99.2     Certification of Michael G. Rippey, Vice President, Finance
          & Administration and Chief Financial Officer of Ispat Inland
          Inc. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002.
</Table>

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